Financial Services Act 2013
Islamic Financial Services Act 2013
(IFSA) came into effect earlier this week more than seven months after they were approved by Parliament. The new acts will govern the country’s financial sector under a single legislative framework for the conventional and Islamic financial sectors.
A statement issued by Bank Negara Malaysia (BNM), the country’s central bank and regulator, read: “The new laws will place Malaysia’s financial sector, encompassing the banking system, the insurance/takaful sector, the financial markets and payment systems and other financial intermediaries, on a platform for advancing toward as a sound, responsible and progressive financial system.”
The FSA and the IFSA consolidate rules governing the conduct and supervision of financial institutions in Malaysia. BNM said it is important for the regulatory systems to “be adequately equipped to respond effectively to new and emerging risks,” in order to keep the economy and financial system from being disrupted.
The new acts represent a consolidation of the
Banking and Financial Institutions Act 1989
Islamic Banking Act 1983
Insurance Act 1996
Takaful Act 1984
Payment Systems Act 2003
Exchange Control Act 1953
. Among the features of the new legislation is a focus on Shariah compliance and governance in Islamic financial sector. The IFSA provides a comprehensive legal framework that is fully consistent with Shariah in all aspects of regulation and supervision, from licensing to the winding up of an institution, said BNM.
Another feature of the legislation is greater clarity and transparency in the implementation and administration of the law due to clearly defined regulatory objectives and accountability of BNM in pursuing its principle objective of safeguarding financial stability, transparent triggers for the exercise of BNM’s powers and functions under the law, and transparent assessment criteria for authorising institutions to carry on regulated financial business and for shareholder suitability.
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