IslamicFinance.de

Ultra High Net Worth Middle Eastern families and individuals have a variety of jurisdictions to look to for succession planning and asset protection vehicles, but the three "go-to" jurisdictions are Cayman, Guernsey and Jersey. Historically, Ultra High Net Worth Middle Eastern families and individuals ("UHNW MEs") may have looked to the Cayman Islands and the British Virgin Islands when selecting a jurisdiction to base an offshore corporate structure. UHNW MEs now look to Cayman as a jurisdiction to house their succession planning vehicles. Guernsey and Jersey are both Crown Dependencies, which means they are not part of the UK but are self-governing dependencies of the Crown. Cayman is a British Overseas Territory, which means it has a constitutional link with, but does not form part of the UK and is similarly self-governing. This status of these three jurisdictions has provided them with the economic, legal and political stability to attract UHNW MEs and continually develop their respective financial services industries.

Despite the attempts of the government of Kazakhstan to make its Islamic finance market more attractive, Islamic products are still rarely used in Kazakhstan. Nevertheless, the government is continuing its efforts to create a favorable legislative and regulatory framework for the development of Islamic finance so that Kazakhstan can become a regional hub. The recently established Astana International Financial Center (AIFC) aims to become the most attractive platform for the development of Islamic finance in the region. To ensure Sharia compliance, the AIFC established the International Expert Council for Islamic Finance (International Council) and the Central Council of the AIFC on the principles of Islamic finance (Central Council).

The United Arab Emirates (UAE) consists of "onshore" and financial free zone jurisdictions, to which different sources of payments law apply. There are currently two financial free zones in the UAE: the Dubai International Financial Centre (the DIFC) and the Abu Dhabi Global Market (the ADGM). Payment services can be provided by non-banks. The 2017 Payment Regulations limits the scope of non-bank payment services, imposing ownership restrictions in many cases. Payment by way of cash remains the most prevalent method of payment in the UAE. However, an increasing number of UAE residents are opting to pay by way of debit and credit cards. Online payments are increasingly common and various other digital initiatives are increasingly utilized. Such initiatives include the government's Mobile Wallet, Etisalat Wallet, NOL Cards, Apple Pay, Samsung Pay and Alipay. Dubai introduced plans to launch its own wallet emCash which can be used as a digital currency and cryptocurrency as well.

Islamic finance has grown significantly over the past few years into an estimated US$2.4 trillion industry. While the use of Shariah compliant financing for the acquisition of aircraft is not a new development, aircraft leasing firms and operators are increasingly looking at Islamic finance as a source of funding for the acquisition of aircraft , whether that be via Islamic banks or through the issuance of Shariah compliant bonds (Sukuk) to raise funds via the debt capital markets.

Although Turkey had its first sukuk issuance in 2011, Sukuk has not been used as a financing model due to deficiencies in its legal framework. In 2013 new types of lease certificates have been introduced. Lease Certificate is defined as a security which is issued by an asset lease company (ALC) for the purpose of financing all kinds of assets and rights. Lease certificates may be issued by sales through or without public offering or in the form of private placement or sales to qualified investors. The lease certificates may be issued by ALCs, which have to be formed as joint stock companies. Lease certificates, sale of movables, immovable and intangible assets to ALC, sale back of these assets to the originator, all the hypothec transactions, the papers issued due to the lease of such assets are exempted from the stamp tax. Gains from the sale of the asset by Originator to ALC, and later by ALC to Originator, are exempted from corporate tax, regardless of the holding period of the asset.

SGI-Mitabu, a joint venture of two Australian solar companies, The Solar Guys International and Mitabu Australia, has revived its plans to fund its Indonesian 250 megawatt solar project with Islamic compliant funding. SGI-Mitabu will offer its sukuk in Labuan, Malaysia. SGI-Mitabu's sukuk issue is set to be the first Islamic finance offering by an Australian corporate and could provide a useful example of alternative sources of capital to other companies. Companies seeking alternative sources of funding may wish to consider whether a form of Islamic finance would be suitable for their next project, even if they have to look outside their own jurisdiction to make it happen.

There is evidence both in the Quran and Hadith that supports wealth succession planning and management. A starting point for a discussion on Islamic wealth management would be the Quranic verses in Surah al-Kahf (Surah no. 18). There are lessons that we may draw from these Quranic verses. These verses indicate that although a person cannot foresee future events, he/she should take measures and have plans to manage their unfavourable effects on life and family welfare. That parents may have a succession plan through which the wealth earned could be transferred to children in the safest possible way.

While a number of mechanisms can be employed to structure a Sukuk transaction from a Shariah perspective, a Sukuk structure typically involves the acquisition of assets from the entity seeking to raise financing (the originator) by a limited recourse, bankruptcy-remote, SPV established in a tax neutral off shore jurisdiction. The Cayman Islands are, unquestionably, the off shore jurisdiction of choice for SPVs on Sukuk structures originating in the Middle East. The prevalence of Cayman SPVs in Sukuk structures stems from a number of factors: Trust regime in the Cayman Islands, Absence of tax, Ease, speed and cost of incorporation, Sophisticated off shore center for financial services, Reliable legal system, Use of Arabic names.

Until recently the banking and financial services sector and business in Uzbekistan have had limited exposure to and understanding of Islamic finance. The key laws such as the Civil Code, the Tax Code and laws on banking and investment do not refer to Islamic finance or to Islamic finance instruments. It is therefore important that Islamic finance and Islamic banking instruments are first recognised as a legislative concept before any regulatory mechanisms are put in place. Foreign banks including Islamic banks may open representative offices or set up subsidiary outlets in Uzbekistan provided they comply with minimum criteria and qualify under requirements imposed by the CBU in accordance with the Regulation on the Procedure for Registration and Licensing of Banking Operations.

With the support of the government to develop Islamic finance in Turkey, Turkish and foreign investors are becoming more and more aware of Islamic financing methods and products in Turkey. The main legislation regulating Islamic banking in Turkey is the Banking Law No. 5411 (the "Banking Law"). Regulated under the same legal framework, participation banks must establish their own financing models approved by shariah scholars, to the extent it is in compliance with Turkish laws. Due to lack of specific regulations on Islamic finance, financing offered by participation banks has its own obstacles. Despite legal and practical issues yet to be resolved, Turkey is determined to increase its standing in the Islamic finance market.

In Nigeria, the practice of Islamic finance was introduced in 1992 by the former Habib Bank (Bank PHB, and now Keystone Bank). The profile of this type of banking was again raised between 2008 and 2009 when Nigeria joined the Islamic Financial Services Board (IFSB). Later, the CBN issued framework dated January 13, 2011 to regulate Islamic finance in Nigeria. In July, 2011 the CBN granted licence to Stanbic IBTC Bank to operate an Islamic banking window and subsequently to Sterling Bank in 2013; the CBN had earlier granted approval for the establishment of Jaiz Bank to operate as the first full-fledged Islamic bank in Nigeria. In sum, for Nigeria to benefit from Islamic finance, the governing laws and regulations must be written and subject to interpretation and analysis.

Iranian Bank Mellat appealed against a decision upholding measures taken by the Treasury to restrict its access to the UK financial market. The Treasury had directed that all persons operating in the UK financial sector were prohibited from having any commercial dealings with the Appellant or its UK subsidiaries. The Appellant argued the Treasury had failed to give adequate reasons for its decision. The High Court and Court of Appeal both dismissed the appeal, however the Supreme Court allowed it. One of the central issues raised was that the lower courts found that the justification for the order was not a problem specific to the Appellant, but a problem with Iranian banks in general. However, the order made no attempt to impose restrictions on other Iranian banks. In that regard, the measure was arbitrary, irrational and disproportionate. The order was also found to be invalid on various procedural grounds.

Malaysia Minister of Finance II Y.B. Dato' Seri Ahmad Husni Mohamad Hanadzlah launched "Labuan IBFC Wealth Management Year 2013". He said Labuan IBFC has grown in the last two years, from 2010 to 2012. The total value of assets for banking and leasing sectors, as well as insurance premiums collected by Labuan IBFC licensed institutions, in aggregate grew to USD76.2 billion or RM236.3 billion. This represents an average annual growth of 13.5%. Moreover, the Asian Development Bank recommended LIBFC Foundation as the holding entity to domicile the USD485 million ASEAN Infrastructure Fund in Labuan last year. For the future, the introduction of a broad range of capital market products needs to be facilitated. Furthermore, a competitive investment management industry has to be established.