3 June 2025

The Accounting and Auditing Organization for Islamic Financial Institutions’ (AAOIFI’s) Governance and Ethics Board (AGEB) in its 41st meeting on 2-3 June 2025, via video conferencing, discussed and approved, in principle, the issuance of the governance standard (GS) _“Application of Shari’ah Governance Principles to Islamic Finance Windows”.

This standard is one of the key outcomes of the comprehensive Shari’ah governance framework project, which was initiated to establish guiding principles, rules, and best practices for a sound and effective Shari’ah governance framework for Islamic financial institutions (IFIs). The project resulted in the issuance of five governance standards in 2024, with this standard representing the sixth in the series. It outlines the principles and requirements for the effective implementation of the Shari’ah governance framework in the context of Islamic finance windows, prescribing specific governance obligations while allowing certain flexibilities.

The board had earlier resolved to defer the issuance of the said standard, initially scheduled for 2024, in order to prolong the public consultation period. This extension was intended to allow for broader engagement and to obtain further feedback from stakeholders on the critical issues and challenges pertaining to Islamic finance windows.

The board, while approving, in principle, the issuance of the governance standard also permitted the inclusion of certain flexibilities where necessary, without compromising the core principles of the standard, in the best interest of the Islamic finance industry. The board further instructed the secretariat to proceed with the issuance of the standard after completing the due process.

The chairman of the AGEB, Farrukh Raza, stated: “I am pleased to announce the in principle approval of this much-needed governance standard. I would like to extend my sincere appreciation to the board members, the relevant working group, and the secretariat for their dedication and tireless efforts”. “This standard reflects the board’s commitment to strengthening governance practices within Islamic finance windows and advancing the stability and development of the broader Islamic finance industry,” he emphasised.

“I am confident that this governance standard will provide a robust and consistent framework for the effective application of Shari’ah governance principles to Islamic finance windows, while accommodating their specific features, needs and challenges,” Raza concluded.