Malaysia overhauls Islamic finance regulations
Malaysia has issued a new Islamic Financial Services Act (IFSA) for its $124 billion Islamic finance market – the largest globally – aimed at protecting depositors by making religious advisers legally accountable for financial products and liable to steep fines and prison time for wrongdoing.
The new rules also include a plan to require Islamic life insurers to separate the life arm from other parts of their business, Bernama new agency reported. The regulations also could spur takeovers in the Islamic insurance sector through capital-base provisions that encourage larger participants.
The new law, which went into effect last week, is seen as a way of enforcing closer adherence to Shariah laws. It would encourage advisers to conduct a closer inspection of the financial products they approve, holding them more accountable, as previous rules governing sharia compliance were just guidelines.
Penalties will now be more severe, with many offences carrying a possibility of up to eight years imprisonment and $7.86 million in fines. The IFSA also gives Malaysia’s finance ministry more powers to further scrutinise financial holding companies and non-regulated entities if they pose a risk to financial stability.
The IFSA may also reshape the Islamic insurance, or takaful sector, by requiring the separation of life and general business lines, the latter covering property and cars. Companies need to establish a new board and capital base for each business under the IFSA.
Malaysia has issued a new Islamic Financial Services Act (IFSA) for its $124 billion Islamic finance market - the largest globally - aimed at protecting depositors by making religious advisers legally accountable for financial products and liable to steep fines and prison time for wrongdoing. The new rules also include a plan to require Islamic life insurers to separate the life arm from other parts of their business, Bernama new agency reported. The regulations also could spur takeovers in the Islamic insurance sector through capital-base provisions that encourage larger participants. The new law, which went into effect last week, is...
Malaysia has issued a new Islamic Financial Services Act (IFSA) for its $124 billion Islamic finance market – the largest globally – aimed at protecting depositors by making religious advisers legally accountable for financial products and liable to steep fines and prison time for wrongdoing.
The new rules also include a plan to require Islamic life insurers to separate the life arm from other parts of their business, Bernama new agency reported. The regulations also could spur takeovers in the Islamic insurance sector through capital-base provisions that encourage larger participants.
The new law, which went into effect last week, is seen as a way of enforcing closer adherence to Shariah laws. It would encourage advisers to conduct a closer inspection of the financial products they approve, holding them more accountable, as previous rules governing sharia compliance were just guidelines.
Penalties will now be more severe, with many offences carrying a possibility of up to eight years imprisonment and $7.86 million in fines. The IFSA also gives Malaysia’s finance ministry more powers to further scrutinise financial holding companies and non-regulated entities if they pose a risk to financial stability.
The IFSA may also reshape the Islamic insurance, or takaful sector, by requiring the separation of life and general business lines, the latter covering property and cars. Companies need to establish a new board and capital base for each business under the IFSA.
