Malaysia’s Islamic finance overhaul boosts protection for depositors
Malaysia’s new Islamic Financial Services Act (IFSA) gives regulators greater oversight as the country seeks to retain its position as the world’s second-largest Islamic Banking market. The new rules will boost protection for depositors by making religious advisers legally accountable for financial products, and liable to steep fines and prison time for wrongdoing. The new rules also include a plan to require Islamic life insurers to separate the life arm from other parts of their business. The regulations also could spur takeovers in the Islamic insurance sector through capital-base provisions that encourage larger participants. The IFSA also gives Malaysia’s finance ministry more powers to further scrutinise financial holding companies and non-regulated entities if they pose a risk to financial stability.