ISLAM AND CIVILISATIONAL RENEWAL THE ISLAMIC FINANCIAL SERVICES ACT, 2013 Malaysia’s Model Framework for Shariah-compliance and Stability

Abstract: Malaysia is said to have created legal history by introducing the world’s first comprehensive legal framework for its Islamic Finance Industry through the pro-active approach of its central regulator (Central Bank of Malaysia, or the CBM) and government-driven Economic Transformation (ETP) Policy. This piece of legislation was crafted by regulators, policy makers and legal drafters to enforce Shariah compliance in a move towards greater financial stability. Factors such as changing demographics and increased growth of Shariah-conscious consumers worldwide, the increasing complexity of financial products, enlightened public policy goals to alleviate poverty, improve equity and enhance growth, as well as increasing global interconnectivity, have driven the regulators to beef up Shariah compliance surveillance. Punitive measures provided under this Act are designed to act as a deterrent to would-be Shariah non-compliance offenders; and at the stroke of a pen the new law has created a new breed of corporate criminals. The recently gazetted Islamic Financial Services Act 2013 (and its conventional counterpart the Financial Services Ac