Post-Public Consultation Update and Clarifications on the Exposure Draft of the IFSB-AAOIFI Revised Sharī’ah Governance Framework

The Islamic Financial Services Board (IFSB) and the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) have now completed the public consultation process for the Exposure Draft (ED) of the IFSB-AAOIFI Revised Sharī’ah Governance Framework.

The public consultation was conducted from 31 March to 23 June 2022. The consultative process included an expert roundtable session and three public hearings that were conducted in English and Arabic languages, which saw large-scale participation by industry stakeholders, with over 800 comments from a wide range of stakeholders including regulatory and supervisory authorities, international organisations, institutions offering Islamic financial services (IIFS), Sharīʻah scholars and other interested parties.

IFSB and AAOIFI would like to extend their deepest appreciation to all stakeholders for their participation and engagement during the public hearings, and the extensive written comments that were provided during the public consultation period. The ED is currently undergoing the finalisation phase. Both AAOIFI and IFSB are committed to the timely completion and issuance of this standard.

As a clarification on the published ED, prior to its issuance for public consultation, the draft went through the requisite due processes including a review by a joint Shari’ah committee. In this connection, Sheikh Muhammad Taqi Usmani (Chairman, AAOIFI Sharī’ah Board and Chairman, IFSB Sharī’ah Board), was erroneously referred to in the Exposure Draft as the Chairman of the IFSB-AAOIFI joint Sharī’ah committee. However, he only delegated this responsibility for the first Sharī’ah review to the joint Sharī’ah committee. Additionally, the scope of review by the joint Sharī’ah committee was limited to reviewing the Sharī’ah related issues only in order to ensure that there are no violations of Sharī’ah rules and principles. Accordingly, mentioning of the names of the joint Shari’ah committee members reviewing the ED, shall not be construed as an endorsement of the ED until the standard is finalised. In accordance with the due process, a second Sharī’ah review of the full revised ED will be conducted by the joint Sharī’ah review committee after the incorporation of public consultation comments by the joint Working Group. The full list of joint Shari’ah Committee members will be published alongside the final standard.

The IFSB and AAOIFI envisage that this standard will provide a global benchmark for a sound and effective Sharīʻah governance framework, that will provide minimum requirements and best practice examples to improve the quality of Sharīʻah governance in IIFS, enhance public confidence and enhance the harmonisation of Sharī`ah governance structures and practices across jurisdictions.

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