Islamic Financial Services Act 2013 · s 223

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223.
Power of Minister to prescribe Islamic financial institutions
(1) The Minister may prescribe any person which is not under the supervision or oversight of the Bank and engaging in Islamic financial intermediation activities as a prescribed Islamic financial institution—
(a) on the joint recommendation by the Bank and the relevant authority which is responsible for the regulation and supervision of such person; or
(b) on the recommendation by the Bank, in any other case, if such person, in the opinion of the Bank, poses or is likely to pose a risk to financial stability arising from—
(i) its Islamic financial intermediation activities which may include the generation of maturity or liquidity transformation, involve imperfect credit risk transfers, create or facilitate excessive leverage or raise concerns of regulatory arbitrage;
(ii) the nature, scope, size, scale or concentration of its
Islamic financial intermediation activities; or

Islamic Financial Services                              197
(iii) its interconnectedness with an authorized person or any other person regulated by the Bank under any written law enforced by the Bank.
(2) For the purpose of making a recommendation under subsection (1), the Bank may, with the approval of the Minister, exercise its examination powers under Part XII on a person referred to in subsection (1) as if the references in such provisions to an
“authorized person” is a reference to the person referred to in subsection (1).
(3) The Minister may, on the recommendation of the Bank, apply all or any provisions of this Act to a prescribed Islamic financial institution from a date specified in the order under subsection (1) and with such amendments as the Minister, on the recommendation of the
Bank, deems necessary, as if the references in such provisions to an
“authorized person”, a “licensed person”, “licensed Islamic bank”,
“licensed takaful operator”, an “institution” and a “financial service provider”, as the case may be, is a reference to such prescribed Islamic financial institution.
(4) With effect from the date specified in the order made under subsection (1), the prescribed Islamic financial institution concerned shall comply with, and be subject to, the provisions of this Act as specified in the order notwithstanding anything to the contrary in any written law.
(5) The Minister may, at any time, amend or revoke an order made under subsection (1)—
(a) on the joint recommendation by the Bank and the relevant authority, in the case of an order made under paragraph (1)(a); or
(b) on the recommendation by the Bank, in any other case.
(6) A prescribed Islamic financial institution which contravenes any provision of this Act or any standards, notice, direction, condition, specification or requirement specified or issued by the Bank under any provision of this Act applied to it under subsection (1) commits an offence under such provision and shall be liable to the same penalty

198
applicable to a licensed person convicted of an offence under such provision and if no offence is provided for such contravention, the prescribed Islamic financial institution commits a breach and the Bank may take an action under paragraph 245(3)(b) in addition to other enforcement actions that the Bank is empowered to take under this
Act.
(7) This section shall not apply to—
(a) a person licensed, approved or recognized by the Securities
Commission under securities laws; or
(b) a licensed entity under the Labuan Financial Services and
Securities Act 2010 [Act 704] and Labuan Islamic Financial
Services and Securities Act 2010 [Act 705].
(8) For the purposes of this section, in the case of a registered person under the Capital Markets and Services Act 2007, the Bank shall—
(a) consult with the Securities Commission in forming an opinion under subsection (1);
(b) notify the Securities Commission before conducting an examination under subsection (2); and
(c) regularly review the status of such prescribed Islamic financial institution, together with the
Securities
Commission, to determine whether the circumstances under subsection (1) no longer applies.
International and domestic transactions

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s 223Power of Minister to prescribe Islamic financial institutions

(1)

The Minister may prescribe any person which is not under the supervision or oversight of the Bank and engaging in Islamic financial intermediation activities as a prescribed Islamic financial institution—

(a)

on the joint recommendation by the Bank and the relevant authority which is responsible for the regulation and supervision of such person; or

(b)

on the recommendation by the Bank, in any other case, if such person, in the opinion of the Bank, poses or is likely to pose a risk to financial stability arising from—

(i)

its Islamic financial intermediation activities which may include the generation of maturity or liquidity transformation, involve imperfect credit risk transfers, create or facilitate excessive leverage or raise concerns of regulatory arbitrage;

(ii)

the nature, scope, size, scale or concentration of its

Islamic financial intermediation activities; or

Islamic Financial Services 197

(iii)

its interconnectedness with an authorized person or any other person regulated by the Bank under any written law enforced by the Bank.

(2)

For the purpose of making a recommendation under subsection (1), the Bank may, with the approval of the Minister, exercise its examination powers under Part XII on a person referred to in subsection (1) as if the references in such provisions to an

“authorized person” is a reference to the person referred to in subsection (1).

(3)

The Minister may, on the recommendation of the Bank, apply all or any provisions of this Act to a prescribed Islamic financial institution from a date specified in the order under subsection (1) and with such amendments as the Minister, on the recommendation of the

Bank, deems necessary, as if the references in such provisions to an

“authorized person”, a “licensed person”, “licensed Islamic bank”,

“licensed takaful operator”, an “institution” and a “financial service provider”, as the case may be, is a reference to such prescribed Islamic financial institution.

(4)

With effect from the date specified in the order made under subsection (1), the prescribed Islamic financial institution concerned shall comply with, and be subject to, the provisions of this Act as specified in the order notwithstanding anything to the contrary in any written law.

(5)

The Minister may, at any time, amend or revoke an order made under subsection (1)—

(a)

on the joint recommendation by the Bank and the relevant authority, in the case of an order made under paragraph (1)(a); or

(b)

on the recommendation by the Bank, in any other case.

(6)

A prescribed Islamic financial institution which contravenes any provision of this Act or any standards, notice, direction, condition, specification or requirement specified or issued by the Bank under any provision of this Act applied to it under subsection (1) commits an offence under such provision and shall be liable to the same penalty

198

applicable to a licensed person convicted of an offence under such provision and if no offence is provided for such contravention, the prescribed Islamic financial institution commits a breach and the Bank may take an action under paragraph 245(3)(b) in addition to other enforcement actions that the Bank is empowered to take under this

Act.

(7)

This section shall not apply to—

(a)

a person licensed, approved or recognized by the Securities

Commission under securities laws; or

(b)

a licensed entity under the Labuan Financial Services and

Securities Act 2010 [Act 704] and Labuan Islamic Financial

Services and Securities Act 2010 [Act 705].

(8)

For the purposes of this section, in the case of a registered person under the Capital Markets and Services Act 2007, the Bank shall—

(a)

consult with the Securities Commission in forming an opinion under subsection (1);

(b)

notify the Securities Commission before conducting an examination under subsection (2); and

(c)

regularly review the status of such prescribed Islamic financial institution, together with the

Securities

Commission, to determine whether the circumstances under subsection (1) no longer applies.

International and domestic transactions