The Islamic Financial Services Act 2013 (IFSA) distinguishes an investment account from an Islamic deposit. An investment account is defined by the application of Shariah contracts with a non-principal guarantee feature for investment purposes. Notwithstanding this, the IFSA provides an adequate legal basis to support the further strengthening of investment account operations, ensuring appropriate protection for investment account holders (IAH) while maintaining the financial stability of the Islamic financial system. Under the IFSA, the priority of payment for investment accounts upon liquidation of an Islamic financial institution (IFI) is treated separately from Islamic deposits, in accordance with the rights and obligations accrued to the IAH.
This policy document on investment accounts aims to outline the regulatory requirements for their conduct. The objectives of this policy document are as follows:
(a) Facilitate the orderly development and operationalisation of investment accounts that are consistent with the IFSA and ensure compliance with Shariah standards issued by the Bank.
(b) Establish strong oversight arrangements and sound risk management infrastructure in the management of investment accounts to safeguard the interests of the IAH and other stakeholders.
(c) Set out minimum disclosure requirements to facilitate fair assessment of investment proposals and performance, supporting informed decision-making by the IAH.
(d) Outline prudential requirements to support sound risk management of investment accounts and ensure financial stability in the Islamic financial system.
This policy document sets out—
(a) specific requirements on the structuring, risk management and market conduct of investment accounts;
(b) oversight requirement over the management of investment account funds and investment assets; and
(c) transparency and disclosure requirements including minimum information to be disclosed in product disclosure sheet, key terms and conditions to be included in primary documents, investment account performance report to the IAH and additional disclosures in the IFI’s financial statements; and
(d) prudential requirements relating to investment accounts.
This document belongs to Bank Negara Malaysia (BNM). Full access to the original source is available here: https://www.bnm.gov.my/banking-islamic-banking
