Kuala Lumpur (25th May 2015): The Islamic Financial Services Act (IFSA) 2013 allows greater flexibility for Islamic banks to structure products, including deposit and investment accounts.

Depositors are now given the option to choose between investment and deposit accounts. Customers, who opt for investment accounts which allow them to invest in the Islamic banks’ portfolio of assets, could potentially enjoy higher returns than deposit accounts.

The Association of Islamic Banking Institutions Malaysia’s (AIBIM) President, Dato’ Mohd Redza Shah Abdul Wahid said, “IFSA aims to encourage banks to diversify their product offerings, hence the Act requires us to clearly differentiate between investment and deposit accounts.

“This allows the banks to customise their products according to the customers’ profile and risk appetite. Those who are prepared to take higher investment risk could potentially earn higher returns”.

Just like any investment, the principal amount for investment accounts is not guaranteed. Since these accounts are not deemed as deposits under IFSA, the funds are not protected under the Perbadanan Insurans Deposit Malaysia (PIDM) scheme.

“The Islamic banks will conduct customer suitability assessments to ensure that customers choose investment accounts that commensurate with their risk appetite, financial profile and capacity. This is in line with the customer protection pillars under IFSA,” Redza added.

With this new product offering, existing Mudharabah account holders can opt for investment or deposit accounts. Islamic banks offering the investment account option have communicated the specific product features and benefits to their respective customers.

As such, customers are advised to inform their banks of their preferred option, be it investment or deposit accounts, by the deadline communicated by their respective banks. Otherwise, their accounts will be maintained as deposit accounts. The Islamic deposit accounts will continue to be guaranteed and covered by PIDM.

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New Message Usage Guidelines developed with AIBIM to enable straight-through processing for Islamic Finance 
Hong Kong, 18 June 2015 – SWIFT, in collaboration with The Association of Islamic Banking Institutions Malaysia (AIBIM) announce the launch of a new rulebook for the purpose of promoting message standards in the Islamic banking and finance market. 

The Islamic finance rulebook has been developed in response to the growing significance of the Islamic banking and finance market. It aims to provide greater clarity around the usage of Shariah-compliant MT messages in order to expedite market harmonisation and increase Straight-through Processing (STP) to improve efficiency and reduce risks and cost.

“With the growing internationalisation of Islamic finance, the rulebook marks a significant milestone in our collaborative efforts. Automation of Islamic finance confirmation flows is now possible through the adoption of international MT messaging standards” says Kiyono Hasaka, Standards Specialist, Asia Pacific. “The future ambition is to automate flows end-to-end covering all major Islamic finance practices”.

Since 2013, the Asia Pacific Standards team at SWIFT has been working in close cooperation with AIBIM to develop STP-enabled financial messaging specific to the requirements of Islamic financial institutions.

The SWIFT Islamic finance rulebook will continue to evolve as the Islamic financial industry continues to meet the evolving business needs in the global financial arena.

This version of the rulebook covers three types of SWIFT confirmation messages:

• MT 300 (Islamic Foreign Exchange Confirmation)
• MT 320 (Islamic Placement Confirmation)
• MT 620 (Islamic Commodity Placement Confirmation)

The future of the rulebook is to include all practices that use Islamic financial instruments, such as previously developed SWIFT Murabahah solution (cost-plus-sales contract), Mudarabah (profit sharing) and Sukuk (Islamic bonds).

“The collaboration between SWIFT and AIBIM has resulted in a concise guideline that would facilitate our members to further enhance their efficiency. We look forward for other Islamic financial institutions in other jurisdictions to utilise this solution as well,” says Yusry Yusoff, CEO/Executive Director of AIBIM.

The SWIFT Islamic Finance rulebook was endorsed by Shariah Advisory Committee of AIBIM and adopted by AIBIM council. It will be available to the Message User Group (MUG) in July 2015. The MUG is a group of users that have registered to use specific messages within a controlled user community. The MUG for the Islamic finance rulebook will also be available for registration at www.swift.com.

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