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Oman Regulators Crack Down on Islamic Finance Sector
The Sultanate’s regulatory authorities have been busy ensuring that the Islamic finance sector operates in accordance with shariah principles and complying with relevant laws and regulations.
Regulatory Framework
The Capital Market Authority (CMA) has been tasked with regulating and supervising takaful operators in the country. Under the Takaful Insurance Law, these operators are required to:
- Be publicly listed on the Muscat Stock Exchange (MSX)
- Have a minimum capital of no less than 10 million Omani rials
- Form an internal specialist shariah committee for auditing their shariah compliance
Additionally, the CMA has issued executive regulations that provide for segregation between the assets of a takaful operator and its funds, as well as the establishment of shariah supervisory boards within operating companies.
Shariah Compliance
The Central Bank of Oman (CBO) is responsible for regulating standalone Islamic banks, including those owned by conventional banks and Islamic windows operating in the country. The CBO has issued guidance on shariah compliance and has the authority to inspect and audit the financial statements of licensed institutions.
In a recent move, the CMA issued fines to several takaful operators for failing to comply with shariah principles. The regulator also suspended the licenses of two companies for violating regulatory requirements.
Shariah-Compliant Activities
The Commercial Companies Law (CCL) requires commercial companies undertaking shariah-compliant activities to have their transactions comply with Islamic law principles. The CMA and the Ministry of Commerce and Industry and Investment Promotion (MOCIIP) are responsible for issuing regulations on shariah-auditing mechanisms to be implemented within these companies.
REIT Regulation
The REIT Regulation also makes references to shariah-compliant real estate investment funds, requiring the establishment of a shariah committee or the use of third-party services to ensure compliance with Islamic law principles.
Regulatory Cooperation
The CMA has been working closely with the MOCIIP and other regulatory authorities to ensure that the Islamic finance sector operates in accordance with relevant laws and regulations. The regulator has also been providing guidance and training to takaful operators and other financial institutions on shariah compliance.
Statement from the CMA
“We are committed to ensuring that the Islamic finance sector operates in a fair and transparent manner, while also promoting economic growth and stability in the country,” said the CMA in a statement.
Impact
The move is seen as a positive step towards strengthening the regulatory framework for the Islamic finance sector in Oman. It is expected to boost investor confidence and attract more foreign investment to the sector.
Sources:
- Takaful Insurance Law
- Capital Market Authority (CMA)
- Central Bank of Oman (CBO)
- Commercial Companies Law (CCL)
- REIT Regulation