Compliance with Shariah requirement is a prerequisite in ensuring the legitimacy and integrity of Islamic financial products and services. In meeting this expectation, it is essential for an Islamic financial institution (IFI) to establish the necessary operational framework and infrastructure to ensure that the conduct of Islamic financial transactions is consistent with Shariah.
The Shariah contract-based regulatory policy is intended to promote consistency of Shariah contract application in Islamic financial products and services. This policy document is envisaged to strengthen legal certainty and Shariah compliance practices by an IFI.
The objectives of this policy document are to –
(a) provide reference on the applicable Shariah rulings for binding wakalah contract;
(b) set out key operational requirements for the implementation of binding wakalah; and
(c) promote end-to-end compliance with Shariah requirements, which further promote sound banking practices and safeguard consumer interests.
This policy document sets out the following:
(a) salient features and essential conditions of wakalah in Part B; and
(b) regulatory and supervisory expectations for the operational requirements on governance and oversight, structuring, risk management, business and market conduct as well as financial disclosure in Part C.
This policy document covers the application of wakalah contract in financial products and services offered by an IFI.
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
