The Shariah Advisory Council (SAC) of Bank Negara Malaysia at its 199th meeting on 26 November 2019 has made a ruling that the proposal to execute tawarruq via Straight-Through Processing (STP) is permissible subject to the following conditions:
- The sale and purchase contracts in tawarruq must be executed in the correct sequence and the transaction must be supported by clear evidence;
- The transacted asset must be identifiable and specifically determined (mu`ayyan bi al-zat) in terms of location, quantity and quality to fulfil the characteristics of a genuine transaction;
- The execution of dual-agency shall observe the requirements as stipulated in the policy document on Tawarruq which include but are not limited to the following:
- the roles and responsibilities of the contracting parties, price determination, maturity date and asset specification shall be agreed upon by the contracting parties; and
- there must be clear segregation of roles and duties to be executed by the agent;
- Ownership of the transacted asset from Shariah and legal perspectives as well as risks associated with the ownership shall be established and evidenced by appropriate documentation or record; and
- The purchaser shall have the right to take delivery of the transacted asset during each sale and purchase contract in tawarruq. In respect of the execution of tawarruq via STP, the option to take delivery shall be clearly disclosed to the customer prior to the tawarruq execution or following the sale transaction of the asset to the customer.