AAOIFI holds 8th meeting of its Governance and Ethics Board in Jordan, approving draft standard on “Shari’ah Compliance Function”

Amman, Jordan – AAOIFI held the eighth meeting of its Goverannce and Ethics Board (AGEB) at Le Grand Amman, Hashemite Kingdom of Jordan. Mr. Shihadeh, CEO, Jordan Islamic Bank, which hosted the meeting, welcomed AAOIFI Board members and wished them all success in their first meeting in Amman and stressed that AAOIFI constitutes the cornerstone of the industry and appreciated its role in standardizing the industry practices. Mr. Omar Mustafa Ansari, Acting Secretary General of AAOIFI, thanked the leaders of Jordan Islamic banking industry for their overall support to AAOIFI and to the initiative of developing Sukuk standards for the ever-changing market realities. He explained that the meeting was being held outside Bahrain for the Board members to have wider exposure to the experiences of specific countries, meet the industry representatives in the area of Islamic finance and establish dialogue with the regulators.

Durig the meeting, the Board deliberated on the public comments received on the exposure draft of ‘Shari’ah Compliance Function’ and adopted the standard. The exposure draft of internal Shari’ah audit standard was also presented to the Board which was deliberated upon and approved to be issued for public commentary in due course.

The objective of the Shari’ah Compliance function standard is to provide a framework for establishing and managing a robust Shari’ah compliance function within Islamic Financial Institutions (IFIs) and for standardizing its practices across the globe. It also highlights key areas that are necessary for developing a Shari’ah compliance function and assists in forming a risk based approach to Shari’ah compliance considering key stakeholders. The standard sets out the requirements for functional and departmental operations to ensure compliance with Shari’ah. Shari’ah compliance is viewed as both a function within IFIs that constitutes part of their governance and control set-up, and as a department which is designed to achieve the broader goal of Shari’ah compliance as a management responsibility. The standard prescribes, inter alia, the key considerations for instituting the Shari’ah compliance function as well as a set of compliance techniques and tools. It sets out the roles and responsibilities of the Shari’ah compliance department, and discusses the reporting line and respective responsibilities including those of various organs of governance towards Shari’ah compliance.

AAOIFI also held a meeting with the leaders of Jordanian Islamic banks, which was chairmed and moderated by Mr. Musa Shihadeh, Chief Executive Officer and General Manager, Jordan Islamic Bank. Mr. Iyad Asali, General Manager, Islamic International Arab Bank; Mr. Samer Altamimi, General Manager, Safwa Islamic Bank; Mr. Mutaz Alyousif, Acting CEO, Al-Rajhi Bank, attended the meeting, along with the representatives of the Central Bank of Jordan who delivered a presentation on overview and update on Islamic finance/ banking in Jordan.

The Chairman of AGEB, Dr. Ishrat Husain commended the  Jordaninan Islamic banking industry, and thanked the central bank for recognizing AAOIFI standards and stated, “Jordan is a role model for other growing Islamic finance jurisdictions with its firm and consistent efforts in developing the Islamic finance industry in the country, especially in the present challenging macroeconomic and socio-political environment.”

On the second day of AGEB meeting, AAOIFI’s delegation held a meeting with the deputy governor of the Central Bank of Jordan (CBJ), H.E. Maher Sheikh Hasan, at the CBJ’s premies in Amman and discussed development and issues pertaining to Islamic finance industry in Jordan. AAOIFI appreciated the CBJ’s efforts in developing Islamic finance in its jurisdiction and stressed the importance of AAOIFI standards that will help develop the industry. AAOIFI was represented by Mr. Omar Mustafa Ansari, Acting Secretary General; Dr. Ishrat Husain, Chairman, AAOIFI Governance and Ethics Board (AGEB); Sheikh Esam Ishaq, Deputy Chairman; and Dr. Hussein Said Saifan, AGEB member and Deputy General Manager, Jordan Islamic bank.

The next AGEB meeting is scheduled to be held in November 2018.