Last month a Swiss referendum approved one the strictest immigration bills in Europe. The fact that immigrants are not welcome in the Alpine republic does not imply, however, that their money is not welcome. Last week the Swiss authorities granted a banking licence to Faisal Private Bank. The Geneva based bank will be the first in Switzerland to operate according to Islamic law (Sharia) principles. The latter prohibit usury, the collection and payment of interest, trading in financial risk, women opening bank accounts without their husband’s approval, etc. Sharia products also cannot be invested in companies involved in gambling, alcohol, tobacco, pornography and the production of pork.
A spokesperson for Faisal Bank, whose principal shareholder is the Bahrain based Ithmaar Bank, said the bank wants to “build bridges between Swiss private banking excellence and financial solutions based on ethics derived from Sharia. [...] This will enable us to deliver an innovative platform for an international clientele which trusts our private bankers because they are also accountable for their values.”
Swiss banks, including UBS, the country’s largest bank, have already opened branches in the Middle East, offering Sharia-compliant financial products to wealthy Arabs. Demand for such services has risen significantly in recent years. The International Association of Islamic Banks estimates that there are about 300 financial institutions specialising in Sharia banking, and that they hold assets worth around $300 billion.
Other European countries also have Sharia banks, but contrary to the Swiss bank, which will cater mainly to non-Swiss residents, these cater mainly to immigrants. One of the first was the Islamic Bank of Britain, established in 2004.
When transferring money to their countries of origin many Islamic immigrants in Europe use an illegal banking network called hawala. Hawala “banks” are operated by hawala brokers, usually small Muslim shopkeepers such as butchers and grocers. They also act as savings banks. The hawala brokers charge a commission which is lower than the charge for similar services by official banks.
Hawala “banks” also operate according to Sharia principles, refusing i.e. to invest in pornography and pork. Investment in terrorism seems to be less of a problem. According to Western intelligence services the hawala brokers play an important role in financing terrorism since part of the commission they charge their customers is sometimes used to sponsor organisations such as al-Qaeda.
Yesterday Ruud Peters, a law professor in Amsterdam and a Sharia expert, said at a conference in Amsterdam that Islamic law is gaining influence in Europe. This is not the case in penal law, he said, but in financial, contractual and inheritance law. He said that Muslims who want to borrow money in order to start a business can do so without having to pay interest. Dutch notaries are also registering a growing number of “Sharia wills” in which Muslims parents bequeath to their daughters only half of what their sons get.