The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) Governance and Ethics Board (AGEB / the board) approved in its 31^st meeting the issuance of the governance standard (GS) 16 “Institutional Framework for the Implementation of Ethics”.

This standard provides guidance to institutions on how to institutionalise ethical conduct and fulfil its fiduciary responsibilities towards stakeholders, as well as, how to promote an ethical culture within the institution to foster ethical conduct. This standard further aims to reduce the likelihood of systematic ethics violations, and it discusses how to detect and respond to any such violation in a timely and effective manner. In addition, this standard intends to safeguard the Islamic finance industry and its market players from potential reputational risk resulting from systemic ethics failures.

It is important to mention that this standard is a continuation of “AAOIFI Code of Ethics for Islamic Finance Professionals” that was issued in 2019, and another outcome of this project is expected to be the handbook of ethics in which AAOIFI has initiated the process.

Mr. Farrukh Raza, chairman of AGEB stated that “it is an honour to announce the issuance of AAOIFI GS 16 “Institutional Framework for the Implementation of Ethics” in light of the increased expectations from the stakeholders that the Islamic finance industry should conduct itself in an ethical manner that reinforces its integrity”. He added that “the board felt the need for this governance standard to remind the directors and the top management of an institution, as well as, the regulators, of their responsibility to institutionalise ethical conduct as per their respective mandates and capacities”.

On this occasion, Mr. Omar Mustafa Ansari, Secretary General, AAOIFI stated that “ I am confident this governance standard will facilitate the institutions in their implementation of AAOIFI Code of Ethics for Islamic Finance Professionals”. He added that “I would like to express my sincere appreciation to the board, relevant working group and secretariat for their remarkable devotion and outstanding effort. In addition, I would like to thank the industry stakeholders who actively attended multiple public hearings in English and Arabic languages and provided their comments in writing”.

AAOIFI GS 16 “Institutional Framework for the Implementation of Ethics” can be accessed by CLICKING HERE.