# Editor's letter

## Comment

Concern over the number of fast food joints now advertising their food as 'halal' have led the Wayne County Commission in Detroit to pass a law penalising those who mislead consumers by falsely advertising halal or kosher products. The penalty is $500 and up to 90 days in prison. Similar laws are sweeping across the US. The relevance of this will not be lost on those working through Islamic finance deals right now – and Asia is fast becoming a centre for such activity. Malaysia is boosting its expertise in Islamic derivatives to further strengthen trade with the Middle East – while Hong Kong and Singapore are ready with the will, experience and bankers to get products into the hands of investors. The crucial part of this story – no Wayne County fast food joint has been found guilty of serving non-halal food. None have even been accused. The local Muslim community has, through protest and lobbying, affected the new law for a crime which has never been committed, but that it says builds trust between the Muslim community and the companies. Unlike in banking, or energy, where major scandal seems to be the biggest driver for change, the Muslim community in Wayne County is closing the stable door well before the horse has bolted. Is this a cultural, religious or geoprahical phenomenon, and could we expect to see the same public-driven legilsation for safe Islamic finance products over here? If so, what will the fines be for selling a US$10,000 note that different Sharia committees do not agree is actually sharia-compliant… to a thousand Muslims?

Banks working in this space need an industry standard sharia-compliant committee (if such a thing could ever be agreed upon…). Because if no standard exists, and retail protection laws are passed, a fresh set of scholarly eyes are going to be passed over all the products on the market at the time. And given the many interpretations of sharia finance (there has still yet to be succesful execution of a basic profit rate swap, for example) the likliehood of one scholar agreeing entirely with another is remote. Even banks within Malaysia talk of the risk of losing scholars on the product approval committee because new scholars, with different backgrounds and leanings, may not approve of the banks own existing products. So take care out there!

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The week on Risk.net, November 10-16, 2017