The neon glow of the Las Vegas Strip, a beacon of global entertainment and a symbol of indulgence, might seem an unlikely backdrop for the world of Islamic investments.
Yet, beneath the glittering facade, Richard Ryan, a seasoned expert in tax, insurance, retirement and estates, is diligently laying the groundwork for Nevada – the home state of Vegas which is 75% desert land – to become a surprising new hub for Shariah compliant trusts in the US.
His vision aims to bridge the perception of ‘Sin City’ with the ethical principles of Islamic finance, showcasing Nevada’s sophisticated legal framework as a competitive advantage.
Richard acknowledges the initial paradox. When introducing the concept of Shariah compliant trusts in Nevada to potential Muslim clients and the broader Islamic finance community, he directly addresses the state’s popular image.
“You certainly have to get past the casinos and the bars here,” Richard admits. However, he emphasizes that the state’s progressive trust laws are what truly matter, as they govern the entire financial landscape.
Indeed, Nevada boasts some of the most advanced trust laws globally, with privacy laws that, according to some European attorneys, rival even Switzerland’s. This legal sophistication, Richard argues, is an intentional strategy to diversify the state’s financial services appeal.
The ‘Vegas’ backdrop, while seemingly contradictory, even offers an advantage: direct flights to countries worldwide including Muslim-majority nations and proximity to California, home to a significant Muslim population.
Dubai Mufti backing
The international Islamic community has shown a surprisingly positive response to Richard’s initiative. He recounts receiving an unprecedented reaction to an article he published on LinkedIn, including engagement from Mufti Desai, a prominent Islamic scholar from Dubai.
Mufti Desai, who graduated from the London School of Economics and operates a Shariah compliant investment bank in Dubai, expressed keen interest in collaborating with Richard. This initial reception indicates a promising path forward for Nevada’s foray into Islamic finance.
Beyond its robust legal framework, Nevada also benefits from a vibrant local Muslim community, which Richard has personally engaged with by attending a Masjid. He notes that the Muslim communities in Los Angeles and Phoenix also boast a rich Islamic heritage.
While the popular image of Nevada might initially overshadow this reality, Richard insists that beneath the surface, a faithful Muslim population thrives. He has encountered no significant pushback in his plans, as the wealthy individuals who typically utilize trusts find the addition of a Shariah compliant layer to be a natural fit for reflecting their faith through their finances.
A key advantage Nevada offers is its asset protection and privacy, likened by some to being ‘the Switzerland of the USA’. Unlike Switzerland, which has begun sharing information with the US Inland Revenue Service, Nevada’s beneficial ownership rules for domestic entities were repealed by the Trump administration, offering a more ‘laissez-faire compliance structure’ at the state level.
Richard clarifies that he is not an attorney and therefore does not provide legal drafting rules. However, he collaborates with Muslim attorneys who specialize in crafting documents that meticulously adhere to intricate Shariah principles such as avoiding Riba, Gharar and Maysir. The adaptability of Nevada’s trust laws allows for a ‘vanilla envelope’ within which specific Shariah compliant provisions can be embedded. This is particularly crucial for Islamic inheritance rules, which often conflict with common law in other states. A Nevada trust, properly structured, can ensure wealth is passed down in accordance with Islamic tenets.
Richard envisions the integration of a Shariah supervisory board or Islamic scholars into the trust’s governance through a ‘directed trust’ statute. While an Islamic trust company in Nevada is not yet established, Richard’s plan involves a trust committee comprising experienced trust officers and Islamic scholars, including Mufti Desai and local Muslim leaders, who will oversee investment decisions and administrative actions to ensure ongoing Shariah compliance. This structure allows for direct guidance from Shariah experts, ensuring investments and distributions align with Islamic principles.
All welcome: From billion-dollar clients to small businesses
The primary target clients for these Shariah compliant Nevada trusts are ultra-high-net-worth or high-net-worth individuals within the US. Richard notes that the US market for Shariah compliant finance is approximately US$9 billion and is growing at an annual rate of 12%. While the current cost of a trust makes it less economical for those with under US$1 million to invest, Richard is exploring flat-fee options to cater to small business owners in the Muslim community who may have illiquid wealth that becomes liquid upon sale.
Richard’s immediate goal is to establish a dedicated Shariah compliant trust company in Nevada, requiring US$1 million in net capital and an additional US$500,000 for operational costs. His aspiration is for this initiative to reach a billion-dollar valuation within the next couple of years, potentially attracting larger financial institutions interested in the Islamic finance market. Within five years, Richard aims to firmly place Nevada on the map as the US center for Islamic finance, leveraging its direct connections to financial hubs like Dubai and its existing infrastructure.
The flexibility of a Nevada trust allows investments in real estate, marketable securities, Islamic insurance and Islamic bonds, providing a wide array of Shariah compliant options not typically available through traditional US broker-dealers.
While not a traditional financial hub like New York, or an entertainment capital like Los Angeles, Nevada’s unique geographical position, combined with its favorable tax laws (no state income tax, no inheritance tax and no state tax asset protection) as well as established case laws supporting asset protection, give it a distinct competitive edge.
Nevada also offers a ‘dynasty trust’ provision, allowing trusts to remain active for up to 365 years, facilitating intergenerational wealth transfer without incurring estate taxes. Furthermore, its ‘charging order’ rule for limited liability companies makes it exceptionally difficult for creditors to access assets held within them.
