The urgency of sharia compliance regulations for Islamic Fintechs: a comparative study of Indonesia, Malaysia and the United Kingdom
| Date | 07 June 2022 |
| Pages | 1264-1278 |
| DOI | https://doi.org/10.1108/JFC-05-2022-0099 |
| Published date | 07 June 2022 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial crime |
| Author | Yudho Taruno Muryanto |
The urgency of sharia compliance
regulations for Islamic Fintechs: a
comparative study of Indonesia,
Malaysia and the United Kingdom
Yudho Taruno Muryanto
Faculty of Law, Universitas Sebelas Maret, Surakarta, Indonesia
Abstract
Purpose –This article aims to explorelegal challenges regarding the regulation and supervisionof Islamic
Fintech and to construct Sharia compliance regulations to strengthen the supervision of Islamic Fintech
operation.
Design/methodology/approach –This type of research is legal research, adopting the statute
approach, comparative approach, and conceptual approach. The focus of the study is Indonesia with
comparativestudies with Malaysia and the United Kingdom.
Findings –Malaysia, Indonesia, and the United Kingdom are all on the top five countries in the Global
Islamic Fintech (GIFT) Index. The list comprises countries that are most conducive to the growth of the
Islamic Fintech market and ecosystem. However, weak supervision and low Sharia compliance are still
becoming prominentchallenges in the implementation of Islamic Fintech, while Sharia complianceis the core
principle for Islamic finance regulation.Another finding is that a good ecosystem of Islamic Fintechs needs
supportive regulations and policies, a Sharia Supervisory Board, and standards of Islamic Fintech Shariah
governance.
Research limitations/implications –This study examines the regulation and supervisionof Islamic
Fintech in Indonesia,Malaysia, and the United Kingdom countries whoseIslamic Fintech industry is growing
rapidly.
Practical implications –This study is a strong reference for countries with potential Islamic finance,
especially when they are constructing the Sharia compliance regulations to strengthen the regulation and
supervisionof the Islamic finance industries.
Social implications –Sharia compliance regulations can be a subsystem in the Islamic financial
ecosystemto encourage Sharia economic growthin various countries.
Originality/value –To ensure Sharia compliance, it is recommendedto take some steps: (a) creating the
Sharia compliance regulations; (b) creatingthe Sharia supervisory boards; and (c) standardizing the Sharia
governanceof Islamic Fintech.
Keywords Islamic finance, Sharia compliance, Regulations
Paper type Research paper
1. Introduction
The Islamic economy is still showing a positive trend even though the Covid-19 pandemic
has caused a worldwide financial crisis. The support of a large Muslim population,the rise
in adherence to islamic teaching values, and the massive digital transformation brought
positive growth in the globalIslamic economy. This optimism is seen in the Islamic financial
sector. Islamic financial assets are estimated to be worth $2.88 trillion in 2019 and are
expected to remain the same in 2020 and growat a CAGR of 5% between 2020 and 2024 to
reach $3.67 trillion (DinarStandard, 2020).
JFC
30,5
1264
Received5 May 2022
Revised19 May 2022
Accepted19 May 2022
Journalof Financial Crime
Vol.30 No. 5, 2023
pp. 1264-1278
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-05-2022-0099
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1359-0790.htm
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