AAOIFI issues exposure draft on ‘code of ethics for Islamic finance professionals’ and invites opinions from Islamic finance industry

The AAOIFI Governance and Ethics Board (AGEB) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) recently approved the issuance of the exposure draft on the ‘code of ethics for Islamic finance professionals’.

The objectives of this code are to assist Islamic finance professionals in understanding the demands of ethical conduct and choosing the right course of action when facing an ethical dilemma; to encourage voluntary adoption of ethical behavior; to facilitate them in becoming role models of ethical behavior for others; to safeguard the reputation of the Islamic finance industry; and to help the industry and the professionals achieve Barakah by following the letter and spirit of the Shari’ah.

This code, in contrast to the two codes of ethics previously issued by AAOIFI in 1999 and 2003, seeks to provide better and more comprehensive understanding of the concept of ethics; is structured in a simple and easy-to-understand format; and offers helpful guidance to facilitate its adoption and implementation.

The content for the code is primarily driven from personal interviews conducted of 59 stakeholders from 4 countries (Bahrain, Pakistan, Turkey, and Oman) who included the CEOs, Shari’ah Scholars, directors, heads and staff members of key departments, as well as Islamic finance regulators and consultants. An online questionnaire was also posted on the AAOIFI website to further enrich the reference material for the code. In the interviews, AAOIFI sought to deeply understand the various ethical issues the Islamic finance professionals are beset with and their way of dealing with those issues, while gathering as many case studies or stories of ethical conduct or misconduct which they are aware of, from the respondents. The case studies would be included in the ‘Handbook’ accompanying the code which shall serve as a supplementary reference material for enhanced understanding and improved application purposes.

The Deputy Chairman of the AGEB, Sheikh Esam Ishaq, stated that “Islamic finance professionals must embrace and hold themselves accountable to higher standard of excellence in their conduct and behavior, especially now that a comprehensive code of ethics is at their disposal which provides detailed guidance on how to tackle and respond to different ethical dilemmas. This is necessary because any major breach of ethics may severely damage the reputation of the global Islamic finance industry. IFIs, as such, should adopt the AAOIFI code of ethics as a policy and ensure that proper periodic training is provided to all employees at junior, middle, and senior levels.”

The public hearings for the code shall be held in the upcoming months of August and September of 2019 in different parts of the world, starting with London, UK, on 22 August 2019. The purpose of the public hearings would be to obtain industry feedback on the exposure draft in addition to comments in writing.  Further details with respect to dates and venues will be announced shortly via the AAOIFI website. Comments on the exposure draft are welcome and should be directed no later than 30 September 2019 to Farhan Noor ([email protected]). All comments and suggestions of the public hearings and written comments are presented to the AGEB to discuss and to make necessary changes required.

The exposure draft on the ‘code of ethics for Islamic finance professionals’ can be accessed By CLICKING HERE.