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Jurisdictions covered

The following 8 jurisdictions are covered in this report:

France; Japan; Malaysia; Philippines; Switzerland; United Kingdom; United States; Uzbekistan.

Questions

The set of questions relating to the topic of Islamic finance and markets and answered by the guide for each jurisdiction covered include:

Overview

• • In general terms, what policy has your jurisdiction adopted towards Islamic finance? Are Islamic finance products regulated differently from conventional instruments? What has been the legislative approach?
• • How well established is Islamic finance in your jurisdiction? Are Islamic windows permitted in your jurisdiction?
• • What is the main legislation relevant to Islamic banking, capital markets and insurance?

Supervision

• • Which are the principal authorities charged with the oversight of banking, capital markets and insurance products?
• • Identify any notable guidance, policy statements or regulations issued by the regulators or other authorities specifically relevant to Islamic finance.
• • Is there a central authority responsible for ensuring that transactions or products are shariah-compliant? Are IFIs required to set up shariah supervisory boards? May third parties, related parties or fund sponsors provide supervisory board services or must the board be internal?
• • Do members of an institution’s shariah supervisory board require regulatory approval? Are there any other requirements for supervisory board members?
• • What are the requirements for Islamic banks to be authorised to carry out business in your jurisdiction?
• • May foreign institutions offer Islamic banking and capital markets services in your jurisdiction? Under what conditions?
• • What are the requirements for takaful and retakaful operators to gain admission to do business in your jurisdiction?
• • How can foreign takaful operators become admitted? Can foreign takaful or retakaful operators carry out business in your jurisdiction as non-admitted insurers? Is fronting a possibility?
• • Are there any specific disclosure or reporting requirements for takaful, sukuk and Islamic funds?
• • What are the sanctions and remedies available when products have been falsely marketed as shariah-compliant?
• • Which courts, tribunals or other bodies have jurisdiction to hear Islamic finance disputes?

Contracting concepts

• • Mudarabah—profit sharing partnership separating responsibility for capital investment and management.
• • Murabahah—cost plus profit agreement.
• • Musharakah—profit sharing joint venture partnership agreement.
• • Ijarah—lease to own agreement.
• • Wadiah—safekeeping agreement.

Products

• • Sukuk—Islamic securities. Have sukuk or other Islamic securities been structured and issued in your jurisdiction to comply with Islamic principles, such as the prohibition of interest?
• • What is the legal position of sukuk holders in an insolvency or a restructuring? Are sukuk instruments viewed as equity or debt instruments? Have there been any court decisions or legislation declaring whether sukuk holders are deemed to own the underlying assets?
• • Takaful—Islamic insurance. Are there any conventional cooperative or mutual insurance vehicles that are, or could be adapted to be, shariah-compliant?
• • Which lines of insurance are currently covered in the takaful market? Is takaful typically ceded to conventional reinsurers or is retakaful common in practice?

Miscellaneous

• • What are the principal regulatory obstacles facing the Islamic finance industry in your jurisdiction?
• • In what circumstances may shariah law become the governing law for a contract or a dispute? Have there been any recent notable cases on jurisdictional issues, the applicability of shariah or the conflict of shariah and local law relevant to the finance sector?
• • Are there any special considerations for the takeover of an Islamic financial institution, outside the requirements of the general merger control regime?
• • Are there any notable features of the Islamic finance regime and markets for Islamic finance products in your jurisdiction not covered above?