The Art of Islamic Banking and Finance: Tools and Techniques for Community-Based Banking

&To define what qualifies asDDA/NOWaccounts (please see Regu-

lation Q regarding eligibility rulesfor interest-bearing checking

accounts)

&To define limitations on certain withdrawals on savings and money

market accounts

&To establish that unlimited transfers or withdrawals are permitted if

made in person, by ATM, by mail, or by messenger

In all other instances there is a limit of six transfers or withdrawals per
month. No more than three of these transactions may be made payable to a
third party (by check, draft, point-of-sale, etc.).
The bank must close accounts where this transaction limit is constantly
exceeded.

RegulationO:LoanstoBankInsiders
This regulation was devised to make certain that bank insiders, such as di-
rectors, senior management, and/or principal shareholders, are not getting
preferential treatment when they deal with the bank (e.g., by obtaining
credit at lower rates than the public), are not given preferential credit stan-
dards when they apply for credit (e.g., by receiving higher rates on their
deposits), do not have access to other customers’ private information, and
do not ‘‘front’’ others in making business decisions based on their preferred
position and insiders’ information.

Regulations P and S
Regulation P requires all banks and financial institutions to safeguard all
personal financial information given by the customer and not to release any
such information to a third party, be it an affiliate, an advertising agency, or
even a government agency, unless authorized by that customer. In addition,
the financial institution is required to mail all its customers a letter—on an
annual basis—detailing the institution’sprivacy policy. A copy of the letter
sent by one of the community banks is shown below.^11 It is also interesting
to note that if a wife opens an account in her name only, her husband can-
not get any information about that account without the approval of the
owner of the account (the wife).
This regulation is considered to be an important expression of the
Judeo-Christian-Islamic value system, which has at its core a fundamental
and keen intent to respect and guard private and personal information. In
fact, this kind of policy is an important feature of the Law (Shari’aa) that
should be highlighted to RF banking scholars, as they expand their efforts
to establish a universal set of regulations that will truly express these values

The Conventional Riba-Based Banking System 175