This marks the issuance of 100 standards so far in areas of accounting, auditing, governance, ethics as well as shari’ah since AAOIFI's inception, a span of 27 years.
“This is a giant leap towards improvements in the overall shari’ah governance and compliance environment for the broader Islamic finance industry. We hope that this standard will support the regulators in establishing uniform practices for establishing and operating shari’ah boards at jurisdiction level and will help in streamlining the Islamic banking and finance practices, within and across jurisdictions in line with the tenets of shari’ah,” said Dr Ishrat Hussain, Chairman, AGEB.
“We have interacted with industry and regulators at a larger canvas for developing this standard. A survey with experts was conducted and public hearing sessions were held between April and July 2017 in Bahrain, UAE, Turkey, and Pakistan in addition to the comments of a number of experts received in writing.”
The new standard aims provide guidance and foundations that define key terms of reference and principles when establishing such boards. It provides detailed guidance on the definition, scope of work, responsibilities, appointment, composition, independence, terms of reference of a Central Shari’ah Board (CSB) and other relevant issues.
Although the standard encourages the creation of CSBs at national levels, the guidance provided would standardise the global regulatory practices in this respect. The standard also presents a country-level approach for regulating the Islamic finance industry within borders, including products, practices, and operations. It is expected that such CSBs will adopt AAOIFI’s shari’ah standards to standardise practices.