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Background

The Islamic Financial Services Board (IFSB), which is based in Kuala Lumpur, was officially inaugurated on 3rd November 2002 and started operations on 10th March 2003. It serves as an international standard-setting body of regulatory and supervisory agencies that have vested interest in ensuring the soundness and stability of the Islamic financial services industry, which is defined broadly to include banking, capital market and insurance. In advancing this mission, the IFSB promotes the development of a prudent and transparent Islamic financial services industry through introducing new, or adapting existing international standards consistent with Sharî'ah principles, and recommend them for adoption.

To this end, the work of the IFSB complements that of the Basel Committee on Banking Supervision, International Organisation of Securities Commissions and the International Association of Insurance Supervisors.

As at December 2022, the 187 members of the IFSB comprise 80 regulatory and supervisory authorities, 10 international inter-governmental organisations, and 97 market players (financial institutions, professional firms, industry associations and stock exchanges) operating in 57 jurisdictions

Malaysia, the host country of the IFSB, has enacted a law known as the Islamic Financial Services Board Act 2002, which gives the IFSB the immunities and privileges that are usually granted to international organisations and diplomatic missions.

Adoption of Standards

Since its inception, the IFSB has issued thirty-six Standards, Guiding Principles and Technical Notes for the Islamic financial services industry. The published documents are on the areas of:

1. Risk Management (IFSB-1)
2. Capital Adequacy (IFSB-2)
3. Corporate Governance (IFSB-3)
4. Transparency and Market Discipline (IFSB-4)
5. Supervisory Review Process (IFSB-5)
6. Governance for Collective Investment Schemes (IFSB-6)
7. Special Issues in Capital Adequacy (IFSB-7)
8. Governance for Islamic Insurance (Takāful) Operations (IFSB-8)
9. Conduct of Business for Institutions offering Islamic Financial Services (IIFS) (IFSB-9)
10. Sharīʻah Goverance System (IFSB-10)
11. Solvency Requirements for Takāful (Islamic Insurance) Undertakings (IFSB-11)
12. Liquidity Risk Management (IFSB-12)
13. Stress Testing (IFSB-13)
14. Risk Management for Takāful (Islamic Insurance) Undertakings (IFSB-14)
15. Revised Capital Adequacy (IFSB-15)
16. Revised Supervisory Review Process (IFSB-16)
17. Core Principles for Islamic Finance Regulations (IFSB-17)
18. Retakāful (Islamic Reinsurance) (IFSB-18)
19. Recognition of Ratings on Sharīʻah-Compliant Financial Instruments (GN-1)
20. Risk Management and Capital Adequacy Standards: Commodity Murābahah Transactions (GN-2)
21. Practice of Smoothing the Profits Payout to Investment Account Holders (GN -3)
22. Capital Adequacy Standard: The Determination of Alpha in the Capital Adequacy Ratio (GN-4)
23. Recognition of Ratings by External Credit Assessment Institutions (ECAIS) on Takāful and Retakāful Undertakings (GN-5)
24. Quantitative Measures for Liquidity Risk Management (GN-6)
25. Development of Islamic Money Markets (TN-1)
26. Stress Testing (TN-2)
27. Disclosure Requirements for Islamic Capital Market Products (IFSB-19)
28. Supervisory Review Process of Takāful / Retakāful Undertakings (IFSB-20)
29. Core Principles for Islamic Finance Regulation [Islamic Capital Market Segment] (IFSB-21)
30. Revised Transparency and Market Discipline (IFSB-22)
31. Financial Inclusion and Islamic Finance (TN-3)
32. Sharīʻah-compliant Lender-Of-Last-Resort Facilities (GN-7)
33. Revised Capital Adequacy Standard For Institutions Offering Islamic Financial Services [Banking Segment] (IFSB-23)
34. Investor Protection in Islamic Capital Markets (IFSB-24)
35. Disclosures to Promote Transparency and Market Discipline for Takāful/Retakāful Undertakings (IFSB-25)
36. Core Principles for Islamic Finance Regulation (Financial Market Infrastructures) (IFSB-26)

The standards prepared by the IFSB follow a lengthy due process as outlined in its Guidelines and Procedures for the Preparation of Standards/Guidelines which involve, among others, the issuance of exposure draft and, where necessary, the holding of a public hearing.

Awareness Promotion

The IFSB is actively involved in the promotion of awareness of issues that are relevant or have an impact on the regulation and supervision of the Islamic financial services industry. This mainly takes the form of international conferences, seminars, workshops, trainings, meetings and dialogues staged in many countries.

See Speeches delivered at the IFSB Inauguration Ceremony (November 2002)

1. Welcoming Speech by Governor, Bank Negara Malaysia, Dr. Zeti Akhtar Aziz
2. Keynote Address by (then) Malaysian Prime Minister, Dr. Mahathir Mohammad