SWIFT has announced that ISO 15022 message standards for the processing of treasury murabaha transactions have been certified compliant with the international Islamic finance standards issued by AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions). This certification paves the way towards the automated processing of murabaha treasury transactions, said to represent 60 percent of all Islamic financing.
Murabaha includes money transfer and commodity trade. While SWIFT has carried the money transfer for many years, commodity trade has been completed manually, usually by fax without any globally agreed standard. SWIFT’s solution uses the ISO 15022 message standards within the guidelines of a murabaha standards rulebook (the guidelines can be downloaded from www.swift.com/IslamicFinance).
“AAOIFI is responsible for global Islamic finance industry standards and we establish best practices for the industry”, says Mohamad Nedal Alchaar, AAOIFI secretary general. “Our collaboration with SWIFT aims to build a well-structured and well-regulated international Islamic finance infrastructure.”
Alain Raes, SWIFT’s chief executive for Europe, the Middle East and Africa, who accepted the compliance certificate on SWIFT’s behalf at the recent Sibos conference in Amsterdam, adds: “Murabaha automation is the first step on a long journey of collaboration with the Islamic financial community.”
The use of ISO 15022 messages over SWIFT does not change the current process between banks, their customers and brokers. However, the data defined in the schedules under the terms of the master murabahamurabaha will benefit from a globally agreed electronic standard, automation which will lead to a reduction in costs and risk, and an audit trail for Sharia agreement is now exchanged using standardized messages via SWIFT as opposed to bilaterally agreed confirmations exchanged manually. Participants involved in compliance.
More than 240 Islamic banks representing 84 percent of global Sharia compliant assets are members of SWIFT. Islamic finance is growing at more than 20 percent per annum, and the demand for Sharia compliant messaging standards is increasing as a result. SWIFT is working with the Islamic financial community to address this demand, both at the level of individual banks, and with organizations such as AAOIFI and AIBIM (the Association of Islamic Banking Institutions Malaysia).
Source : http://www.theasset.com/article/18683.html - Nov 24, 2010
