Labuan Islamic Financial Services and Securities Act 2010 · Updated to 15 Oct 2022 · Chapter 4
49. Duty to segregate client’s assets
Feedback & supportA fund manager of Islamic public funds shall ensure that each client’s assets are deposited into a trust account and maintained by a custodian or a trustee or any other person as may be permitted by the Authority, as the case may be, not later than the next bank business day or such other day as may be specified by the Authority, following the day on which the fund manager receives the client’s assets.
fund manager
“fund manager” means a person who, for valuable consideration, provides management services alone or with investment advice or administrative services in respect of securities for the purposes of investment, including dealing in securities or such other activity as may be specified by the Authority;
Where client’s assets that are required by this section to be deposited into a trust account are received by a fund manager in a place outside Malaysia, the fund manager may deposit such assets into a trust account maintained by it in that place.
deposit
“deposit” means a sum of money received or paid on terms in compliance with Syariah principles— (a) under which it will be paid or repaid, with or without profits or at a premium or discount; or (b) under which it is payable or repayable, either wholly or in part, with any consideration in money or money’s worth, and such payment or repayment being either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it, regardless whether the transaction is described as a financing, an advance, an investment, a saving, a sale or a sale and repurchase, but does not include money paid bona fide— (A) by way of an advance or a part payment under a contract for the sale, hire or other provision of property or services, and is repayable only in the event that the property or services is not or are not in fact sold, hired or otherwise provided; (B) by way of security for the performance of a contract or by way of security in respect of any loss which may result from the non-performance of a contract; (C) without prejudice to paragraph (B), by way of security for the delivery up or return of any property, whether in a particular state of repair or otherwise; and (D) in such other circumstances, or to or by such other person, as the Authority may specify;
The trust account referred to in subsections (1) and (2)
shall always be kept separate from those of the fund manager, and shall be so marked in the books of the fund manager relating to each client’s account, so that at no time shall such monies, property or other valuable consideration form part of or be mixed with the general assets of the fund manager, and all investments made by the company as trustee shall be so designated that the trusts to which the investments belong can be readily identified at any time.
property
“property” includes any plant, machinery, equipment or other chattel attached or to be attached to the earth and “charters of ships” means bareboat charters only and does not include the transportation of passengers or cargo by sea or the charter of ships on a voyage or time charter;
Labuan Islamic Financial Services and Securities 67
Client’s assets held in a trust account shall not be available for the payment of the liabilities of a fund manager or liable to be paid or taken in execution under an order or process of court for the payment of the liabilities of a fund manager.
Nothing in this section shall be construed as taking away or affecting any lawful claim or lien which any person has against or upon any client’s assets held in a trust account or against or upon any client’s assets received for the purchase or from the sale of securities before such assets are deposited into the trust account.
Any person who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding three million ringgit or to imprisonment for a term not exceeding five years or to both.