A study on cross-border waqf with special reference to the application of Indonesian waqf core principles

Abstract

The Waqf Core Principles (WCP) are international rules governing waqf activity. It was launched by Bank Indonesia, the Indonesian Waqf Board, and the International Research and Training Institute-Islamic Development Bank (IRTI-IsDB) in October 2018. The WCP focuses primarily on waqf management aspects and has not yet addressed crucial elements necessary for facilitating cross-border waqf, which encompasses not just the transfer of funds but also the international transfer of goods. Furthermore, supporting the Indonesian and Kuwaiti governments’ plans to undertake cross-border waqf transactions in the near future is another important reason for regulating cross-border waqf in the WCP. This study aims to provide a new international rule on cross-border waqf as part of the WCP’s technical notes. The examination of waqf-related laws in Indonesia and Malaysia, along with international laws and rules, as well as selected cross-border waqf activities, was conducted using a doctrinal legal research methodology that employed various approaches depending on the type of source. This study also encompasses brief interviews with global organizations, scholars, and experts. Upon reviewing 52 Indonesian waqf-related regulations, 31 Malaysian waqf-related regulations, 15 international laws, 8 international rules, and 36 practices from various global institutions, it is clear that several core elements must be met to carry out cross-border waqf transactions prudently. These elements include the most secure methods for managing the cross-border movement of the mawquf and usufruct, the significance of applying Know Your Customer (KYC) principles to all involved parties in cross-border waqf, the choice of governing law, mechanisms for dispute resolution, and the protection of perpetuity and the waqif’s will in cross-border waqf transactions. The findings indicate that various key elements can be taken from Indonesian and Malaysian waqf-related regulations, international laws, and notable cross-border waqf practices to address the legal gap in the WCP and facilitate cross-border waqf transactions. All these elements were subsequently processed using the sharia legal framework and formulated as ready-to-implement international rules, featuring comprehensive clauses aimed at enhancing the quality of WCP. The clauses were organized according to the stages of implementation in cross-border waqf. Beginning with the stage prior to creation, followed by the creation stage, the management stage, and concluding with the development stage of cross-border waqf. This research recommendation is expected to potentially enhance the waqf sector worldwide by establishing a prudent framework for governing cross-border waqf transactions. Keywords: Cross-Border Waqf, Waqf Legal Framework, Indonesia, Know Your Customer, Waqf Core Principles