Bank Negara Malaysia issues policy document on Bai`al-Sarf (currency exchange)
30 May 2018
On 11 April 2018, Bank Negara Malaysia ("BNM") issued a policy document on Bai`al-Sarf. It aims to promote end-to-end Shariah compliance within the Islamic financial institutions by specifying Shariah and operational requirements in relation to its application in Islamic financial transactions. The Shariah requirements highlight salient features and essential conditions of a Bai`al-Sarf contract. The operational requirements outline the regulatory expectations with respect to the governance and oversight, structuring, risk management as well as business and market conduct of Bai`al-Sarf.
The policy document will come into effect on 1 April 2019, except for paragraph 25 (submission requirement) which came into effect immediately and provides that Islamic financial institutions that offer products or services which apply Bai`al-Sarf are required to submit an implementation plan to comply with the policy document to Jabatan Perbankan Islam and Takaful of Bank Negara Malaysia no later than 11 July 2018.
The BNM announcement and the Policy Document can be found on the BNM website www.bnm.gov.my or by clicking here.