Out-Law News | 10 Sep 2014 | 12:19 pm | 1 min. read
The new usage guidelines will be made available to registered users before the end of this year, said SWIFT, which developed the rulebook in collaboration with the Association of Islamic Banking Institutions Malaysia (AIBIM) and the Malaysian Islamic Finance Community. The guidelines will provide greater clarity around SWIFT MT message usage based on Islamic principles, and enable straight-through processing (STP).
"Globally, the growing interest in Islamic finance as a viable alternative to conventional finance has heightened awareness of the need to adopt international standards to automate paper-based Islamic finance operations," said Kiyono Hasaka, SWIFT's Asia Pacific standards specialist. "With SWIFT's growing presence in Southeast Asia and the Middle East, we are well-positioned to act as an enabler to bring the financial communities together, define market practice and automate Islamic finance processes using international messaging standards."
SWIFT is a global provider of secure financial messaging services which connects more than 10,500 banks, financial institutions and corporations in 215 countries and territories. Its first set of Islamic finance guidelines, the Murabaha Message Usage Guidelines, was published in 2010 and covers the use of MT messages for Treasury Murabaha. This type of transaction involves a money transfer and a commodity trade, typically involving two banks and two bankers.
Sido Bestani, the head of SWIFT's Middle East, North Africa and Turkey operations, said that the global growth of Islamic finance had driven the project.
"Bahrain has traditionally been a centre for Islamic Banking and Finance in the Gulf region; the UAE unveiled plans this year for Dubai to become the global capital of the Islamic economy; and the governments of the UK and Germany have recently issued Sukuk, or Shari'a-compliant bonds," he said.
"This is clearly a growing sector within the banking and finance industry and our customers are looking at SWIFT to assist them in standardising and automating processes in Islamic financial institutions. SWIFT has been working with some large Islamic banks in the Gulf for the past five years to adapt SWIFT standard messages to Islamic finance transactions such as Murabaha, in order to use SWIFT network/messages for such instruments," he said.