Malaysia overhauls Islamic finance regulations

Bank islamMalaysia 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.



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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...

Bank islamMalaysia 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.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

$
Personal Info

Donation Total: $10.00

 

 

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