Overview of Islamic

Financial Services
Act 2013

Prepared by:
Fatehah binti Ahmad Fuzi (D20151070123)
Aimizatul Natasya Binti Ahmad (D20151070155)
LAWS REPEALED BY ENACTMENT
OF FSA AND IFSA

Banking and Financial Institutions Act 1989 and

Insurance Act 1996

Islamic Banking Act 1983 and Takaful Act 1984

Payment Systems Act 2003 and Exchange Control

Act 1953

Financial Services Act 2013 (FSA) and Islamic

Financial Services Act 2013 (IFSA)
 What is Islamic Financial Services
Act 2013 ?

An Act to provide for the regulation and supervision of Islamic

financial institutions, payment systems and other relevant entities
and the oversight of the Islamic money market and Islamic foreign
exchange market to promote financial stability and compliance
with Shariah and for related, consequential or incidental matters.
 IFSA (2013)
Part I: Preliminary
Part II: Regulatory Objectives and Powers
and Functions of Bank Came into force on 30 June
Part III: Authorization
Part IV: Shariah Requirements
2013
Part V: Payment Systems
Part VI: Prudential Requirements
Part VII: Ownership, Control and Transfer
of Business
Part VIII: Financial Groups
Part IX: Business Conduct and Consumer
Protection
Part X: Islamic Money Market and Islamic
Foreign Exchange Market
291 sections
Part XI: Submission of Document or
Information
Part XII: Examination
Part XIII: Directions of Compliance
Part XIV: Intervention and Remedial Action
Part XV: Other Powers of Bank
Part XVI: Enforcement and Penalties
Part XVII: General Provisions
Part XVIII: Repeal, Savings and Transitional 18 Parts with 16 Schedules
 Promote financial
stability

OBJECTIVE Strengthen
compliancy to Shariah

Strengthen regulatory
framework for Islamic
financial institution
 KEY FEATURES OF THE NEW
LEGISLATION
Greater transparency and accountability of the CBM in carrying out
its principal object to safeguard financial stability through a more
risk-focused and integrated approach to the regulation of financial
institutions;
A comprehensive or end-to-end Shariah-compliant legal framework
with respect to regulation and supervision (from licensing to
winding-up);
Strengthened business conduct and consumer protection
requirements to promote consumer confidence in the use of
financial services and products;
Strengthened provisions for effective enforcement and supervisory
intervention through imposition of higher penalties to act as a
credible deterrent; locus standi given to CBM to initiate civil
actions in court against financial institutions. CBM can also issue
directions of compliance or accept legally enforceable
undertakings that commit financial institutions to take specific
actions to address identified risks.
 Contract-Based Regulatory Framework

Islamic Finance:
Islamic banks conduct financial intermediation functions using Shariah
contracts.
Distinct risk and reward profiles based on Shariah contracts

End-to-end Shariah compliance under IFSA 2013

Operational Oversight
Shariah Standards Resolution
Standards Functions
Compliance with Strengthened risk Codification of the Priority of payment
fundamental management, role of the Shariah reflective of
requirements of governance, committee and board underlying Shariah
respective Shariah transparency & of directors of contracts
contracts disclosure, market financial institutions
conduct and other in ensuring Shariah
operational aspects compliance
of applying Shariah
standards
 ASSET LIABILITIES

Investment Investment
Islamic
Sales Based Equity Based Fee Based Accounts Account
Deposits
(Equity) (Other)
Murabahah Mudharabah Wakalah Wadiah Mudharabah Wakalah
Istisna Musharakah Kafalah Qard Musharakah
Ijarah Rahnu Tawarruq
Tawarruq
 CONCLUSION

IFSA 2013 provides greater clarity and transparency in the

implementation of the law. This includes clearly defined
regulatory objectives and accountability of Bank Negara Malaysia
in pursuing its principal object to safeguard financial stability.
The Act provides transparent triggers for the exercise of Bank
Negara Malaysia's powers and functions, and transparent
assessment criteria also for authorising institutions to carry on
regulated financial business, and for shareholder suitability.
There is a clear focus on Shariah compliance and governance in
the Islamic financial sector.