By Daniel Bases - Analysis
NEW YORK (Reuters) - Ask about Islamic finance in the United States and the answer, even from a government regulator, is often another question: "Do you mean terror financing?"
Far from it.
Indeed, for what was once a main destination for devout Muslims around the world looking to invest using Islamic law as a guideline, the United States appears to have lost out to Europe, especially the United Kingdom, and Asia.
Many foreigners from the Middle East have been reluctant to bring their investments to U.S. financial markets after the Sept 11, 2001 attacks, as they fear their money might be misconstrued as linked to the activities of Islamic radicals.
That concern was compounded by the national security fears raised by U.S. politicians in 2006 after the United Arab Emirates' company, Dubai Ports World, bought major U.S. port facilities, and were forced to sell them to an American firm to quell the uproar.
"The common perception is that the U.S. is anti-Islamic finance, anti-Muslim, anti-Arab," said Isam Salah, head of the Islamic finance practice at the New York law firm King & Spalding.
"People in our shop sit around and think that is wrong. The Federal Reserve has had study groups (on Islamic finance) looking at it and is open to receiving applications. But they don't have their marketing hats on as much as the UK does," Salah said.
In 1997 and again in 1999, the Office of the Comptroller of the Currency, one of the regulators of U.S. banks, issued rulings giving permission for financial institutions to sell certain Islamic financial products. Continued...
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