LEGAL ISSUES RELATED TO THE SHARIAH ADVISORY COUNCIL IN MALAYSIA

Malaysia has always aspired to be the hub for Islamic banking and finance. Various measures have been, and are being, carried out to promote Malaysia as an international Islamic banking and financial centre. As the backbone for this, the national Shariah Advisory Council (SAC) has been established under the auspices of the Central Bank of Malaysia Act 1958 (CBMA). Under the CBMA, the SAC has been conferred a statutory function as the authority for the ascertainment of Islamic law for the purposes of Islamic banking, as well as business and other types of Islamic financial businesses. In 2009, the CBMA 1958 was replaced and repealed. With the coming into force of the CBMA 2009, the role and functions of the SAC was reinforced and upgraded in terms of appointments of members and, most importantly, that the Shariah rulings pursuant to any reference made to the SAC by the Civil court or arbitrator concerning Shariah matters shall be binding on the Islamic financial institutions as well as on the court and any arbitrator. The issue of whether or not the SAC is the final arbiter on Islamic banking and finance disputes or, in other words, there is no longer a process of judicial review where it involves Shariah matters, will be the highlight of this paper. To what extent does the post CBMA 2009 solve the binding nature of the SAC upon the Civil courts of Malaysia as its rulings and directives are only relevant to ‘Shariah’ issues? What would be the situations if the issues of the Islamic banking and finance cases are deemed not to amount to a ‘Shariah’ issue, but are purely on banking, land matters or contractual interpretations? Has there any actual legal reform been brought about by this amendment or is it merely a cosmetic changes? If the court were to be bound by the SAC rulings, does this not usurp the independence of the judiciary which is the corner stone of the principle of separation of powers between the executive, the legislature and the judiciary? The above legal issues will be critically explored with the help of cases decided by the Malaysian Civil courts, pre and post CBMA 2009

Money laundering: The paradox of deterrence mechanism

The menace of money laundering is globally acknowledged and the spate of its increase remains unabated. However, a potent tool to deal effectively with this problem lies in the procedure and efficacy of prosecution. Though a lot has been achieved in term of legal and regulatory framework, it is imperative to note that in an environment where corrupt practises remained unpunished due to lack of enforcement, all efforts are likely to be lost. Law enforcement and other supporting agencies will unlikely have any real impact. Unfortunately, this is the scenario in most developing countries of the world including Nigeria. Potent strategies are therefore required for effective implementation of the legislations. This paper seeks to examine money laundering activities in Nigeria while focusing on implementation challenges and obstacles. Suggestions and recommendations are also included on how to achieve enforcement and the subsequent effective implementation of AML/CFT. It is therefore the contention of this paper that achieving deterrent is hinges on a strengthen AML/CFT framework and to this effect, having a strong political commitment and well-functioning coordination structures is essential. Proper resources to achieve the policy objectives, in addition to coordination arrangements that will effectively support the implementation of activities are also fundamental to reach the deterrent effect

UNFAIR CONTRACT TERMS IN MALAYSIAN ISLAMIC BANKS: EMPOWERING BANK CONSUMERS BY ISLAMIC EDUCATION ETHICS

Purpose of study: The purpose of this study is to examine the importance of Islamic education ethics-based on the objectives of Shariah (maqasid al-Shariah) to bank consumers in raising their knowledge about their contractual rights and obligations since better-decision making empowers them to avoid unfair contractual terms in transactions with Islamic banks and manage their financial affairs responsibly. Methodology: Using qualitative analysis, this study reviews previously selected literature on Islamic education ethics and applies maqasid al-Shariahas a benchmark to determine the importance of Islamic financial literacy education. To emphasize such importance, the contents of both primary and secondary data are analyzed which include: official websites of Bank Negara Malaysia, books, academic journals, newspapers, and related industry reports. Result: Results shows that the Islamic educational ethics based on maqasid al-Shariah empowers bank consumers to improve their reading habits in making informed choices to assert their rights by being aware of the content and fairness of contract terms towards raising their financial literacy standard in avoiding unfair contractual terms and be equipped with Islamic financial knowledge and skill to demand for equitable contractual terms. Applications of this study: This study is important to Malaysian bank consumer empowerment since applying Islamic education ethics contributes to sound financial choice and better-decision making of whether or not to contract with IBIs since having no basic knowledge of contractual rights and obligations with Islamic banks, then they have little defense against one-sided and unfair contractual content. Novelty/Originality of this study: Because bank consumers do not read their contracts; this study promotes Islamic education ethics in empowering bank consumers to improve financial literacy in avoiding unfair contractual terms while making informed financial decisions and increase acceptability of Islamic banking products. This study contributes to the literature on Islamic ethics specifically on Islamic financial literacy educational ethics base on maqasid al-Shariah

Unfair contract terms in Malaysian Islamic banks: empowering bank consumers by Islamic education ethics

Purpose of study: The purpose of this study is to examine the importance of Islamic education ethics-based on the objectives of Shariah (maqasid al-Shariah) to bank consumers in raising their knowledge about their contractual rights and obligations since better-decision making empowers them to avoid unfair contractual terms in transactions with Islamic banks and manage their financial affairs responsibly. Methodology: Using qualitative analysis, this study reviews previously selected literature on Islamic education ethics and applies maqasid al-Shariahas a benchmark to determine the importance of Islamic financial literacy education. To emphasize such importance, the contents of both primary and secondary data are analyzed which include: official websites of Bank Negara Malaysia, books, academic journals, newspapers, and related industry reports. Result: Results shows that the Islamic educational ethics based on maqasid al-Shariah empowers bank consumers to improve their reading habits in making informed choices to assert their rights by being aware of the content and fairness of contract terms towards raising their financial literacy standard in avoiding unfair contractual terms and be equipped with Islamic financial knowledge and skill to demand for equitable contractual terms. Applications of this study: This study is important to Malaysian bank consumer empowerment since applying Islamic education ethics contributes to sound financial choice and better-decision making of whether or not to contract with IBIs since having no basic knowledge of contractual rights and obligations with Islamic banks, then they have little defense against one-sided and unfair contractual content. Novelty/Originality of this study: Because bank consumers do not read their contracts; this study promotes Islamic education ethics in empowering bank consumers to improve financial literacy in avoiding unfair contractual terms while making informed financial decisions and increase acceptability of Islamic banking products. This study contributes to the literature on Islamic ethics specifically on Islamic financial literacy educational ethics base on maqasid al-Sharia

Anti-money laundering and counter financing of terrorism regulation of banking institution in Malaysia

The Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA) is the sole legislation dealing with this matter in Malaysia. Part 4 of this Act is the basic regulation for ‘reporting institutions’, including all types of bank. As Part 4 is only general, the Malaysian Central Bank as the ‘Competent Authority’ has issued detailed Guidelines. All ‘reporting institutions, banks included, must follow the Standard Guidelines (UPW/GP1). There are ten Sectoral Guidelines UPW/GP1[1] is for banks. Failure to follow the Act and the associated Guidelines could result in severe legal consequences