Islamic Banking Act · s 8

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8.
Criteria for granting and refusing licence
(1) In considering whether to grant a licence, the Authority shall have regard to —
(a) the need to protect the public interest or the interests of depositors, customers, creditors and other potential depositors, customers and creditors; and
(b) the need to protect the security, reputation and economic interests of Brunei Darussalam in relation to financial matters.
(2) Without prejudice to the generality of subsection (1), the
Authority shall not grant a licence unless the Authority is satisfied that —
(a) the applicant enjoys a high reputation in the financial community or will be able to do so if a licence is granted;
(b) every person who is to be a director, controller or manager of the business is a fit and proper person to hold that position;

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(c) the applicant will carry on Islamic banking business in
Brunei Darussalam and, in carrying on the business, will at all times maintain adequate accounting and other records and adequate systems of control of its business and records;
(d) in the case of an applicant which is incorporated in
Brunei Darussalam, its capital issued and paid up shall at all times be not less than $100,000,000, deduction having been made in respect of a debit balance, if any, appearing in the profit and loss account of the applicant;
(e) in the case of an Islamic bank whose head office is situated outside Brunei Darussalam —
(i) its capital issued and paid up is not less than the equivalent of $500,000,000 deduction having been made in respect of a debit balance, if any, appearing in the profit and loss account of the Islamic bank; and
(ii) it holds net head office funds of not less than $30,000,000 in respect of its business in
Brunei Darussalam, at all times, in the form of assets approved by the Authority;
(f) the aims and operations of the Islamic banking business which the applicant desires to carry on will not involve elements which are contrary to Hukum Syara’; and
(g) that there are provisions in the
Memorandum of Association and Articles of Association of the applicant concerned, for the establishment of a Syariah advisory body comprising of at least three Muslim religious scholars, of which two are citizens of
Brunei Darussalam, to advise the applicant on the operations of its
Islamic banking business in order to ensure that they do not involve any element which is contrary to Hukum Syara’.
(3) In determining for the purposes of subsection (2)(b), whether a person is a fit and proper person to hold any position, regard shall be had to —
(a) his probity;

Islamic Banking 20
(b) his competence and soundness of judgment for fulfilling the responsibilities of position including, without limitation, the due diligence he is likely to conduct and fulfil —
(i) in respect of customers, based on the principle of “know the client”; and
(ii) in respect of the sources, destination and application of customer funds; and
(c) whether the public interest, the interests of potential depositors, investors, customers and parties or the reputation of
Brunei Darussalam are, or are likely to be, in any way prejudiced by his holding that position, and, without prejudice to the generality of this section, regard may be had to his education, experience, record, conduct and activities in business or financial matters.
(4) Without prejudice to the generality of subsections (1) and (2), the
Authority shall not grant a licence to an applicant if it appears to the
Authority that —
(a) the applicant is an institution which is closely linked with any person; and
(b) the applicant’s close links with that person or any matter relating to any laws of any jurisdiction outside Brunei Darussalam or administrative provisions to which that person is subject are such as would (were a licence to be granted to the applicant) prevent the effective exercise by the Authority of the Authority’s supervisory functions in relation to the applicant.
(5) For the purposes of subsection (4), an applicant is closely linked with —
(a) any person who is or, if he were an undertaking, would be its parent undertaking;
(b) any undertaking which is a subsidiary undertaking of the applicant;

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(c) any undertaking which is or, if any person falling within paragraph (a) were an undertaking, would be a fellow subsidiary undertaking; and
(d) any person in accordance with whose directions or instructions the directors of the applicant are accustomed to act, and any reference to the applicant’s close links with any person shall be construed accordingly.
(6) Notwithstanding anything in the preceding provisions of this section, an Islamic bank shall not be granted or hold a licence if the
Authority is satisfied that 50 per cent or more of its capital issued and paid-up is owned by or on behalf of the government of any country or territory other than Brunei Darussalam or of an agency of any such government, or that all or a majority of the persons having the directions, control or management of the bank are appointed by or on behalf of any such government or agency:
Provided that the Authority may, in its absolute discretion, grant a licence to any such Islamic bank for such period not exceeding one year at any time as the Authority may think fit.

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s 8Criteria for granting and refusing licence

(1)

In considering whether to grant a licence, the Authority shall have regard to —

(a)

the need to protect the public interest or the interests of depositors, customers, creditors and other potential depositors, customers and creditors; and

(b)

the need to protect the security, reputation and economic interests of Brunei Darussalam in relation to financial matters.

(2)

Without prejudice to the generality of subsection (1), the

Authority shall not grant a licence unless the Authority is satisfied that —

(a)

the applicant enjoys a high reputation in the financial community or will be able to do so if a licence is granted;

(b)

every person who is to be a director, controller or manager of the business is a fit and proper person to hold that position;

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(c)

the applicant will carry on Islamic banking business in

Brunei Darussalam and, in carrying on the business, will at all times maintain adequate accounting and other records and adequate systems of control of its business and records;

(d)

in the case of an applicant which is incorporated in

Brunei Darussalam, its capital issued and paid up shall at all times be not less than $100,000,000, deduction having been made in respect of a debit balance, if any, appearing in the profit and loss account of the applicant;

(e)

in the case of an Islamic bank whose head office is situated outside Brunei Darussalam —

(i)

its capital issued and paid up is not less than the equivalent of $500,000,000 deduction having been made in respect of a debit balance, if any, appearing in the profit and loss account of the Islamic bank; and

(ii)

it holds net head office funds of not less than $30,000,000 in respect of its business in

Brunei Darussalam, at all times, in the form of assets approved by the Authority;

(f)

the aims and operations of the Islamic banking business which the applicant desires to carry on will not involve elements which are contrary to Hukum Syara’; and

(g)

that there are provisions in the

Memorandum of Association and Articles of Association of the applicant concerned, for the establishment of a Syariah advisory body comprising of at least three Muslim religious scholars, of which two are citizens of

Brunei Darussalam, to advise the applicant on the operations of its

Islamic banking business in order to ensure that they do not involve any element which is contrary to Hukum Syara’.

(3)

In determining for the purposes of subsection (2)(b), whether a person is a fit and proper person to hold any position, regard shall be had to —

(a)

his probity;

Islamic Banking 20

(b)

his competence and soundness of judgment for fulfilling the responsibilities of position including, without limitation, the due diligence he is likely to conduct and fulfil —

(i)

in respect of customers, based on the principle of “know the client”; and

(ii)

in respect of the sources, destination and application of customer funds; and

(c)

whether the public interest, the interests of potential depositors, investors, customers and parties or the reputation of

Brunei Darussalam are, or are likely to be, in any way prejudiced by his holding that position, and, without prejudice to the generality of this section, regard may be had to his education, experience, record, conduct and activities in business or financial matters.

(4)

Without prejudice to the generality of subsections (1) and (2), the

Authority shall not grant a licence to an applicant if it appears to the

Authority that —

(a)

the applicant is an institution which is closely linked with any person; and

(b)

the applicant’s close links with that person or any matter relating to any laws of any jurisdiction outside Brunei Darussalam or administrative provisions to which that person is subject are such as would (were a licence to be granted to the applicant) prevent the effective exercise by the Authority of the Authority’s supervisory functions in relation to the applicant.

(5)

For the purposes of subsection (4), an applicant is closely linked with —

(a)

any person who is or, if he were an undertaking, would be its parent undertaking;

(b)

any undertaking which is a subsidiary undertaking of the applicant;

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(c)

any undertaking which is or, if any person falling within paragraph (a) were an undertaking, would be a fellow subsidiary undertaking; and

(d)

any person in accordance with whose directions or instructions the directors of the applicant are accustomed to act, and any reference to the applicant’s close links with any person shall be construed accordingly.

(6)

Notwithstanding anything in the preceding provisions of this section, an Islamic bank shall not be granted or hold a licence if the

Authority is satisfied that 50 per cent or more of its capital issued and paid-up is owned by or on behalf of the government of any country or territory other than Brunei Darussalam or of an agency of any such government, or that all or a majority of the persons having the directions, control or management of the bank are appointed by or on behalf of any such government or agency:

Provided that the Authority may, in its absolute discretion, grant a licence to any such Islamic bank for such period not exceeding one year at any time as the Authority may think fit.