The Sudanese Islamic Bank of Khartoum, recently removed from the list of Specially Designated Nationals (SDN List) administered by the United States Department of the Treasury Office of Foreign Assets Control (OFAC), has revealed plans to move into Kenya. Such a move would be the first cross border expansion of Islamic finance in East Africa. Currently Kenya is taking steps to permit Islamic finance by revamping its finance laws. Kenya already leads the region in Islamic finance by being home to two Shari’ah compliant banks, a Takaful company and an array of Shari’ah compliant banking products in conventional banks. Moreover, Kenya has also reformed its capital markets laws to allow the issuance of Sukuk.

The Bank of Khartoum was privatized in 2002 and is now mostly owned by the UAE’s Dubai Islamic Bank which holds 60% of its shares since 2005. This move into Kenya is seen as part of an overall strategy by the Dubai Islamic Bank to tap into emerging opportunities in Islamic finance across a number of sub-Saharan Africa countries. It is believed that East Africa is set to be a global Islamic finance hotspot, with Kenya, Uganda, Sudan, Tanzania and Somalia all redoubling their efforts to attract the Muslim dollar. This growth is thought to lead to new challenges to the respective central banks to ensure they are well prepared to regulate Islamic financial institutions if new to the country.

This announcement from Bank of Khartoum comes mere days after OFAC removed the bank from a blacklist of Sudanese entities and individuals who had been subjected to economic sanctions since 1997 because of the country’s alleged financing of terrorism.

The Bank of Khartoum’s removal from the OFAC SDN List is already having a positive effect and is a perfect example of why blocked parties should pursue removal from the list. It just goes to show that removal from this list is possible in some scenarios and life does go on afterwards. In order to remove a name from the OFAC SDN List one most show, through evidence and arguments, changed circumstances or that the designation was made due to mistaken identity.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.

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