Kuwait City, Kuwait – More than eighty delegates comprising of regulators, bankers and legal practitioners around the world gathered in the Seminar on Legal Issues in the Islamic Financial Services Industry, co-organized by the Islamic Financial Services Board (IFSB) and the Federal Reserve Bank of New York recently. The two-day Seminar on 1 and 2 March 2005 was held for the first time in Kuwait City and was graciously hosted by the Central Bank of Kuwait City.
The Seminar provided a platform for delegates to explore in depth and to gain better understanding of legal issues and risks to which institutions offering Islamic financial services (IIFS) are exposed within the existing regulatory and supervisory regimes in countries which host these institutions.
“The theme of this Seminar represents a subject of high worthiness and relevance to our quest for strengthening the foundations of the industry and ensuring its sustainable development, especially under the increasing challenges and competitions in today’s global financial market”, said H.E. Sheikh Salem Abdul Aziz Al-Sabah, Governor of the Central Bank of Kuwait at the opening ceremony.
Professor Rifaat Ahmed Abdel Karim, Secretary-General of the IFSB said, “The IFSB takes great interest in this Seminar because as Islamic financial transactions become more sophisticated, competitive and international in scope, the legal risk arising from them can increasingly be a cause for concern for IIFS”.
“Given the different nature of financial contracts and the diversity of legal framework to which they could be subjected, IIFS face risks related to both their documentation and enforcement”, he added.
According to Mr. Thomas C. Baxter, Jr., General Counsel and Executive Vice President, Federal Reserve Bank of New York, “Regulators, including regulators in the United States, are just beginning to recognize the growing importance of Islamic finance, globally as well as domestically. We are striving for a better understanding of the principles and tenets underlying Islamic finance, so we can accommodate the free exercise of religion and still carry out our secular mandate – the fostering of safe and sound practices in the banks that we supervise. This is complicated in the United States by our very complex system of financial services regulation, which divides responsibility for supervision among a number of federal agencies as well as between the federal government and the states”.
The Seminar which was opened to the IFSB and non-IFSB members is part of the IFSB’s initiative in promoting awareness and understanding on issues that have an impact on or relevance to the regulation and supervision of the Islamic financial services industry.
*Note to Editors
The IFSB was officially inaugurated on 3 November 2002. Its establishment was the culmination of an extensive two-year consultative process initiated by a group of governors and senior officials of central banks and monetary authorities of various countries, together with the support of the Islamic Development Bank, the International Monetary Fund, and the Accounting and Auditing Organization for Islamic Financial Institutions.
The IFSB serves as an international standard setting body of regulatory and supervisory agencies that have vested interest in ensuring the soundness and stability of the Islamic financial services industry, which is defined broadly to include banking, capital market and insurance. In advancing this mission, the IFSB will promote the development of a prudent and transparent Islamic financial services industry through introducing new, or adapting existing international standards consistent with Islamic Shari’a principles, and recommend them for adoption.
