Readers of SFW may recall that we have been closely watching University Islamic Bank in Ann Arbor, Michigan:
We have always been troubled by many aspects of Shariah-Compliant Banking and Finance and we were taken aback by the attitudes expressed by the President of the bank, Stephen Ranzini. We addressed all of those issues in blog posts over the past month or so.
But overnight we came across information that indicates that the trouble at University Islamic Bank goes much further than we realized.
Not only has the bank been delisted and relegated to the pink sheets, but it is also in receipt of a Cease and Desist Order from the FDIC. And given the implications of zakat in the first place, the FDIC order applies to aspects of University Islamic Bank’s business operations which raise alarms.
They have been accused of operating the bank in such a manner as to be in violation of the Bank Secrecy Act. The Bank Secrecy Act of 1970 is also known as the Currency and Foreign Transactions Reporting Act and it requires financial institutions to help the US government prevent money laundering.
To make matters worse, University Islamic Bank also has been accused of violating Treasury Department record-keeping regulations.
The bank has been ordered to discontinue use of the “SWIFT” (Society for Worldwide Interbank Financial Telecommunication) system. It is more than a little interesting that the US government at one time cooperated with SWIFT to attempt to track terror funds but that was interrupted and/or altered when several publications revealed these activities back in 2006.
The legal scholars at SANE have provided their own, excellent analysis of the FDIC order to University Islamic Bank. We urge you to check it out: