Islamic Finance in the US – Innovation, Compatibility and Challenges Umar F Moghul, Partner
As the Shariah addresses human activity generally, so does Islamic finance – in principle particularly – go beyond mere technicalities and legalities, urging a concern for all of creation as service to the divine Islamic tenets, for example, promote honesty, transparency and fairness, express concern for the well-being of employees, partners and counterparties, and place certain limits on monopoly and wealth concentration. These more general principles, along with the detailed legalities, fit together within the purpose of Islamic law: securing benefit and preventing harm.
The US is not normally considered among the most significant markets for Islamic finance. And to date, governmental and regulatory efforts to welcome and integrate Islamic finance into the prevailing system have not been as conspicuous as those made by certain other western nations such as the UK.
But there are, in fact, important regulatory efforts and successes that continue to allow Islamic finance to innovate and succeed in the US. Many of these achievements have had an impact on Islamic finance globally.
This article explores the compatibility and challenges of implementing Islamic financial – legal principles within the US regulatory framework as well as the innovation that has taken place in overcoming some of these challenges.