Wa`d - Overview

Transcription

1. 3 of 25 Wa `d PART A OVERVIEW 1. Introduction 1.1 Compliance with Shariah requirements is a prerequisite in ensuring the legitimacy and integrity of Islamic financial products and services. It is therefore, essential for an Islamic financial institution (IFI) to establish sound operational framework and infrastructure to ensure that its conduct of Islamic financial transactions is consistent with Shariah. 1.2 The Shariah contract-based regulatory policy is intended to promote consistency of Shariah contract application in Islamic financial products and services. Consistency in the application of wa`d is important as it is used across Islamic financial products and services in combination with other Shariah contracts to mainly secure future trade transactions or as a risk mitigation arrangement. This policy is envisaged to strengthen legal certainty and Shariah compliance practices by IFIs. 1.3 This policy document aims to – (a) provide reference on Shariah rulings applicable to wa`d; (b) set out key operational requirements for the implementation of wa`d; and (c) promote end-to-end compliance with Shariah requirements, which further promote sound banking and takaful practices and safeguard consumer interests. 1.4 This policy document sets out the following: (a) salient features and essential conditions of wa`d in Part B; (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; and (c) requirement for IFIs to submit gap analysis and implementation plan on wa`d in Part D. 2. Applicability 2.1 This policy document is applicable to all IFIs as defined in paragraph 5.2 offering Islamic financial products and services using the binding wa`d or binding bilateral wa`d (muwa`adah) as the case may be. 3. Legal provisions 3.1 The requirements in Part B of this policy document are specified pursuant to – (a) section 29(1) of the Islamic Financial Services Act 2013 (IFSA); and (b) section 33E(1) of the Development Financial Institutions Act 2002 (DFIA). 3.2 The requirements in Part C of this policy document are specified pursuant to – (a) sections 29(2), 57, 135(1) and 155 of the IFSA; and (b) sections 33E(2), 41, 42C(1) and 116 of the DFIA. Issued on: 2 February 2017
2. 4 of 25 Wa `d 3.3 The guidance in this policy document is issued pursuant to section 277 of the IFSA and section 126 of the DFIA. 4. Effective date 4.1 This policy document comes into effect on 1 January 2019. 5. Interpretation 5.1 The terms and expressions used in this policy document must have the same meanings as assigned under the Financial Services Act 2013 (FSA), IFSA and DFIA, as the case may be, unless otherwise defined in this policy document. 5.2 For the purpose of this policy document: “S” denotes a standard, an obligation, a requirement, specification, direction, condition and any interpretative, supplemental and transitional provisions that must be complied with. Non-compliance may result in enforcement actions; “G” denotes guidance which may consist of statements or information, intended to promote common understanding and advice or recommendations that are encouraged to be adopted; and “Islamic financial institution” or “IFI” means – (a) a licensed Islamic bank; (b) a licensed takaful operator and a professional retakaful operator; (c) a licensed bank and a licensed investment bank approved under section 15(1)(a) of the FSA to carry on Islamic banking business; and (d) a prescribed institution approved under section 33B(1) of the DFIA to carry on Islamic financial business. 5.3 A glossary of terms used in this policy document is set out in Appendix 2. 6. Related legal instruments and policy documents 6.1 This policy document must be read together with other relevant legal instruments and policy documents that have been issued by the Bank. Issued on: 2 February 2017