Thursday, May 23, 2024
FeatureMeeting the unique needs in Islamic wealth management

Meeting the unique needs in Islamic wealth management

The world’s first solution incorporating the concept of Islamic charitable endowment such as the Waqf Private Client Foundation ensures Labuan IBFC’s pole position.

With its complete suite of Islamic wealth management structures and solutions, effective regulatory standards, a Shariah Supervisory Council (SSC) and facilitative business environment,  is well-placed to cater to the needs of the global Islamic wealth management industry.

Solutions such as private foundations, Waqf foundations, Islamic trusts and private trust companies as well as an entire raft of Islamic fund management vehicles definitely facilitate the wealth management needs of a growing Islamic Ummah.

Underpinning these innovative structures is Labuan IBFC’s comprehensive infrastructure with dedicated legislation, Shariah governance and fiscal incentives for Shariah compliant financial transactions, providing a facilitative and flexible framework for industry players.

This in turn creates a facilitative base from which industry practitioners are able to create innovative solutions to meet customized demands and preferences, especially in order to meet the expectations of ultra-high-net-worth individuals (UHNWIs).

In Labuan IBFC, Shariah compliance is endorsed by the Labuan Financial Services Authority (Labuan FSA)’s SSC comprising leading global Shariah scholars and practitioners. This is a key point as unlike other similar bodies in other jurisdictions, Labuan IBFC’s SSC takes on a supervisory role, not merely advisory, and hence SSC rulings are able to be used as a reference in the court of law.

In promoting the growth of Islamic wealth management, Labuan IBFC also offers a conducive environment for global Islamic banking and re-Takaful players to operate. In fact, Labuan IBFC is one of the few common law jurisdictions that offer clients a choice of common law trusts and civil law foundations embedded with Shariah compliant solutions.

Labuan Islamic trust and Labuan Islamic foundation have attractive features which wealthy families, individuals and non-profit organizations can use for various purposes including wealth creation and accumulation, succession planning, asset protection, enhanced confidentiality, asset consolidation and management, family investment planning and heirship planning.

In recent years, Labuan IBFC has further expanded the horizon of possibilities in Islamic wealth management through its private client Waqf foundations which have attracted interest from founders in Asia Pacific such as Singapore, as well as Jordan and Saudi Arabia from the Middle East.

The Labuan International Waqf Foundation is an Islamic private foundation which creates a unique solution which allows for an endowment via the principles of Waqf to be incorporated into a private foundation allowing a substantive addition to the standard private client Islamic foundation.

Waqf as we know benefits not only the Muslim Ummah, but mankind in general and is distinct from pure charitable giving, as it only allows for the benefits of the Waqf asset to flow to the designated beneficiaries while the asset itself must remain sustainable and independently managed to ensure it continues into perpetuity, with God’s grace.

Indeed, Labuan IBFC is the first jurisdiction in the world to introduce the ability to utilize the concept of Waqf in wealth preservation and management using contemporary and internationally recognized foundation laws.

The distinct advantage of establishing a Waqf using a foundation as the legal structure is it offers the founder (Waqif) legal certainty, thus allowing proper control and management of the Waqf in accordance with the founder’s wishes based on the Shariah principles on Waqf and provides for greater transparency, organized structure and thus, sustainability in the management of Waqf assets.

The founder may establish different kinds of Waqf according to customized preferences and needs such as self-dedicated Waqf, charitable Waqf, joint Waqf and family Waqf. Thus not only is there an option of a standard Waqf foundation, Labuan FSA has also envisioned various modalities of this structure to meet the expectations of UHNWIs.

The unprecedented growth of the Islamic finance industry
The Islamic financial industry has seen an unprecedented pace of growth and development in the past 30 years. The industry has also been evolving to meet the changing needs of the modern economy, especially now as players venture into new frontiers to bring greater value to the economy, society and environment.

In Islamic finance specifically, Labuan FSA is committed to continually working in tandem with the market to further develop its Shariah compliant offerings in order to spearhead innovation and acceptability of Islamic financial solutions, including but not limited to developments in Islamic wealth management. The new frontier of Islamic fintech is an area to watch out for, with a business-friendly regulator which adheres to international standards of compliance from prudential, Shariah and international standards of governance as well as transparency.


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