Md Nor, Mohd Zakhiri (2013) Conceptualizing legal and shari'ah compliance risks in generating legitimate profit: An analysis of sale and trading activities and court judgment in Malaysia and United Kingdom. In: Crossroads East and West: Visions of the Economy in the Islamic and Western Legal Traditions, 4-5 February 2013, International University College, Turin, Italy. (Unpublished)

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Abstract

Drawn from a doctoral research which analyses the interaction of fatwa, Shari'ah rulings, resolutions and conventional laws in contemporary Islamic finance, this paper is prepared on two lines of thought; the first being that the Islamic finance industry is booming in major parts of the world, including but not limited to Malaysia, Australia, Hong Kong and etc. The second line of thought is that Islamic finance contracts could entrench cross-border thus attracting numerous jurisdictional issues such as forum convenience and determination of Shari 'ah matters by those non-experts in the area of Islamic finance. Despite the fact that the industry booms and goes through robust development, often times, the issues of legal and Shari 'ah risks are less considered.Therefore, this paper lays out the concept of risks underlying the Islamic finance regulation system from both the legal and Shari'ah viewpoints, highlighting that the core principles of Islamic finance is goods and commodities can be sold at profit.Money is not a commodity and cannot be sold or lent out for profits, it needs to be invested in real economic activities like buying and leasing of assets, buying d 8" selling of goods, investment in businesses, investment in stocks and infrastructures.Profits generated by real economic activities will be shared between the financial institution and customers and society at large.On the other hand, interest/usury is unlawful.In discussing this, the paper critically examines the issue of legitimate profit generated from sale and trading activities within the current context of today's world transactions.For this purpose, a number of case studies are presented on selected sale and trading activities under Islamic finance products -murabahah, bay bithaman ajil, tawarruq, bay al-inah, mudharabah and musharakah mutanaqisah.This paper then examines some highlights on the Shari'ah perspective of the profits generated from these sales and trading activities and court judgment in Malaysia and the UK.In conclusion, the paper seeks to propose recommendations for the betterment of profits generation in Islamic finance transactions to be truly in line with the spirit of Shari'ah.

Item Type:	Conference or Workshop Item (Paper)
Uncontrolled Keywords:	Legal Compliance Risk, Shari'ah Compliance Risk, Legitimate Profit, Sale and Trading, Court Judgment
Subjects:	B Philosophy. Psychology. Religion > BP Islam. Bahaism. Theosophy, etc H Social Sciences > HG Finance K Law > K Law (General)
Divisions:	College of Law, Government and International Studies
Depositing User:	Dr. Mohd Zakhiri Md. Nor
Date Deposited:	23 Feb 2016 07:35
Last Modified:	23 Feb 2016 07:35
URI:	https://repo.uum.edu.my/id/eprint/17206

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