rules and responsibility islamic financial services board

������L��d���#�#��eN�#�E.I�u��d��R�T�`C�j���y��l��=n� ISLAMIC FINANCIAL SERVICES BOARD CAPITAL ADEQUACY REQUIREMENTS FOR SUKŪK, SECURITISATIONS AND REAL ESTATE INVESTMENT [8] See Zeti Akhtar Aziz, Islamic Banking and Finance Progress and Prospects Collected Speeches: 2000 – 2005, Bank Negara Malaysia: Kuala Lumpur, 2005 at p. 205. Certain authorities do not require ‘paper qualifications’ or formal education in Shari’ah studies, but some other authorities specifically state the necessary working experience in the Islamic finance industry and the minimum length of time for such experience. In other jurisdictions such a requirement is provided in the article of association or in the constitution of the institution. The organisation promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards … 0000000016 00000 n [6], In addition, Shari’ah scholars must also assess the economic implications of the product to the Ummah. As they are essential to Islamic finance’s growth, Shari’ah advisors need to play a role in ensuring that these disciplines are not in contradiction with Shari’ah requirements. The lack of knowledge and comprehension among Shari’ah scholars about modern financial practices. Another aspect that needs to be considered by Shari’ah scholars is their role in strengthening the governance of Islamic financial institutions as well as instilling Islamic values in the financial institutions’ business operations and governance. Banks need to be able to attract and to retain experienced and conscientious directors and officers. Directors therefore have a collective responsibility to manage the company. Therefore, it is timely to consider the establishment of such a dedicated and professional body for Shari’ah advisors. All the duties of the Shari’ah board and its members should be stated clearly in their letter of appointment or term of reference for their appointment and, upon acceptance by the Shari’ah scholar, it shall constitute a binding contract of service between him or her and the institution. Having said that, Shari’ah is the backbone of the industry and the role of Shari’ah scholars is very pertinent to ensure that the credibility and integrity of the industry are maintained. More often, the products will face hurdles from any of those aspects. Shari`ah advisors are defined in the Governance Standards of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), as follows: Shari`ah advisors are specialized jurists, particularly in fiqh mu’amalat and Islamic finance, entrusted with the duty of directing, reviewing and supervising the activities related to Islamic finance in order to ensure that they are in compliance with Shari`ah rules and principles. startxref Moreover, they may even be called as witnesses in cases involving Islamic finance institutions they are servicing or be questioned by the court about their services. var addy17313 = 'akram' + '@'; 0000001649 00000 n Islamic finance is a global financial system that complies with sharia (Islamic law) — a code of conduct that guides all aspects of Muslim life. Categories // Ethics. Some jurisdictions, such as Malaysia, have also listed the duties and responsibilities of Islamic finance institutions to support the Shari’ah board’s function. The prevalent practice is to allocate a retainer fee for the Shari’ah advisors, and some allocate a meetings allowance as well. (Signed) Kofi A. Annan Secretary-General [8] This will include facilitating Shari’ah audits, ensuring Islamic and ethical management practices, protecting consumers’ rights and ensuring the accountability of the financial institutions. 37 OF 2002) General Code of Conduct for Authorised Financial Services Providers and Representatives [As amended by Board Notice 43 of 14 May 2008] I, Jeffrey van Rooyen, Registrar of Financial Services … 166 19 For instance, Shari’ah advisors need to be aware of the new Malaysian move of deregulation or liberalization of a certain fraction of the financial industry and evaluate its impact on the Islamic finance industry. 7. Shari’ah Boards’ Duties and Responsibility. <]>> Central to this fast growing segment of the international banking and finance scene is the Shariah Supervisory Board (SSB) which can be defined as the group of Shariah scholars supervising and guiding Islamic Banks & Financial … Apart from the above structure, certain quarters have suggested that the industry appoint a permanent Shari’ah advisor in each Islamic finance institution. Existence of such provision is highly desirable. Shari’ah boards should have binding authority in their existence and function. Therefore, it increases the tendency to replicate conventional products and modify them to be Shari’ah-compliant. More importantly, Shari’ah governance ensures that the industry is at all times in accord with the wishes and laws of the Almighty by ensuring the legitimacy of the products offered. Islamic financial institutions that offer products and services conforming to Islamic principles must, therefore, be governed by a religious board that act as an independent Shari’ah Supervisory Board comprising of at least three Shari’ah scholars with specialised knowledge of the Islamic laws … This is due to the fact that only qualified and competent members will be able to perform their role well. 0000021149 00000 n Collective responsibility. The Islamic Financial Services Board (IFSB) is an international standard-setting body of … For instance, Section 3 of the Malaysian Islamic Banking Act 1983 prescribes the following: (1) Islamic banking business shall not be transacted in Malaysia except by a company which is in the possession of a licence in writing from the Minister authorizing it to do so. A number of laws created the DIFC and the necessary centre bodies, which include the DFSA. This will definitely require them to have a good command of languages, as they need to read and examine all the terms, conditions, clauses and secondary contracts that are set out in the contract, as well as all the supporting documents. This includes all the classic scholars who have provided a wealth of guidance and references for the current scholars to work on and further develop. Thus, it is proposed that a professional association of Shari’ah advisors be formed and that this body organize and ensure a continuous professional development (CPD) programme for Shari’ah advisors, establish an acceptable qualification for members and oversee the conduct of Shari’ah advisors. x�b```f``z��$�@����(�q��3i``�]�O ���� This website is not responsible for, and does not control, such external content. in the Islamic finance industry (‘Islamic Finance 2009’, International Financial Services London, February 2009). In addition to the above point, it is also important to note that while Shari’ah advisors deserve remuneration for the professional service they render and efforts invested, financial independence has to be achieved as well. 166 0 obj<> endobj Legitimacy and Enforcement of Shari’ah Decisions. This means that the decision made by a Shari’ah board needs to be binding on the management of the Islamic finance institution and, moreover, they are the highest authority on Shari’ah issues and transactions. Principle 1.2 declares that the Islamic finance institution has to ensure that its Shari’ah board shall have clear terms of reference regarding its mandate and responsibility, well-defined operating procedures … Duties and Responsibilities of Shari’ah Boards from Legal and Regulatory Perspectives. [2] See Faris Mahmoud Abomouamer, An Analysis of the Role and Function of the Syariah Control in Islamic Banks, (Cardiff: University of Wales), 1989 at p. 366. They are further considered as the stakeholders’ advocate regarding Shari’ah compliance and optimum service. It also lists the types of data and documents considered confidential and those which are not and proposes certain disciplinary or administrative actions that may be taken against Shari’ah board members for breaching the non-disclosure agreement. We have developed the infrastructure to dramatically improve cost and time to market for financial services. //--> 0000014716 00000 n Collective Investment Rules (CIR) Conduct of Business (COB) Data Protection Module (DAT) Designated Non-Financial Business and Professions Module (DNF) [VER1/06-11] Enforcement (ENF) Fees (FER) Fund Protocol Rules (FPR) General (GEN) Glossary (GLO) Islamic Finance Rules (IFR) Islamic Financial Business Module (ISF) Markets Rules … It serves as an international standard-setting body of regulatory and supervisory agencies that have vested interest in ensuring the soundness and stability of the Islamic financial services industry, which is defined broadly to include banking, capital market and insurance. To clients in this press release as available ” basis and has not been in! Board assure stakeholders that the development of Islamic Banking and finance, IIUM other! 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