2 September 2026

PR/49/2026

Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Governance and Ethics Board (AGEB / the board), at its 47^th meeting held on 2 September 2026, via video conferencing, approves, in principle, the issuance of the governance standard (GS) 25 “Principles of Assessment of Necessity for Obtaining Conventional Reinsurance by Takaful Institutions” and reviewed and discussed the preliminary study (PS) for the proposed GS on “Purification, Charity and Zakah Funds”.

GS 25 “Principles of Assessment of Necessity for Obtaining Conventional Reinsurance by Takaful Institutions” sets out the fundamental governance principles and internal control requirements governing the circumstances in which a Takaful institution may utilise conventional reinsurance for risk management purposes on the basis of necessity. The standard aims to ensure that any such use is subject to appropriate Shari’ah governance, oversight and controls. During the meeting, the board discussed the comments received during the public hearing stage and approved the standard in principle for issuance, subject to the incorporation of certain amendments by the secretariat. The standard will also be referred to the AAOIFI Shari’ah Board for further consideration and approval of certain Shari’ah-related matters arising from the review process. Upon completion of this review and the remaining due process requirements, the standard will be finalised for issuance.

The board also reviewed and discussed the preliminary study for the proposed GS on “Purification, Charity and Zakah Funds”. The study highlights that the governance of these funds, including their sourcing, disbursement, oversight and reporting, remains comparatively under-standardised despite their significance and sensitivity to the Shari’ah compliance obligations of Islamic financial institutions (IFIs). The proposed standard is intended to address governance, oversight, internal controls, reporting, transparency and disclosure relating to purification, charity and Zakah funds, with the aim of promoting consistency, accountability and proper utilisation in accordance with Shari’ah principles and rules.

The board also received an update on AAOIFI e-codification and glossary project, a major strategic initiative aimed at digitising, standardising and systematically organising AAOIFI Standards and technical pronouncements.

Mr. Farrukh Raza, chairman of AGEB, stated: “I would like to extend my sincere appreciation to the board members, the respective working group, the Takaful governance committee and the secretariat for their dedicated efforts and continued commitment to developing robust governance standards for the Islamic finance industry”. He added: “The proposed GS on purification, charity and Zakah funds is a significant project for the Islamic finance industry, particularly given the importance and sensitivity of these funds and the need for greater consistency, accountability and transparency in their governance and utilisation. I am optimistic that, once developed, this standard will provide a strong foundation for sound governance practices in this area and contribute to strengthening confidence in the Islamic finance industry”.

On this occasion, Mr. Omar Mustafa Ansari, secretary general of AAOIFI, stated: “I am pleased with the in-principle approval of the GS on the assessment of necessity for obtaining conventional reinsurance by Takaful institutions. This is an important and practical standard for the Takaful industry, particularly in markets where the availability and capacity of re-Takaful remain limited”. He added: “I would also like to extend my sincere appreciation to the industry stakeholders who participated in the public hearings and provided valuable written comments. Their contributions have helped strengthen the standard and ensure that it appropriately addresses the practical challenges faced by the Takaful industry while maintaining the necessary Shari’ah governance and control requirements”.