The AAOIFI Governance and Ethics Board approves, in principle, the exposure draft of the governance standard on Islamic crowdfunding in its 21st meeting

The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held the 21st meeting of its Governance and Ethics Board (AGEB / the board) on 15 and 16 June 2021 via video conference.

The board primarily discussed the exposure draft of the governance standard on Islamic crowdfunding, which aims to set out a comprehensive framework for good governance of Islamic crowdfunding. The members were of the view that adoption of this standard at an early stage of a nascent sector will contribute towards its growth by guiding the regulators and stakeholders and enhancing the public confidence in Islamic crowdfunding. The members also were optimistic that developing the standard will assist in economic development of startups and growth of established businesses through the promotion of Shari’ah compliant investments at retail level as well as the expansion of social finance sector.

The board reviewed the draft of the standard and deliberated on the conceptual issues with regards to Islamic crowdfunding and directed the secretariat to incorporate the required changes and issue the exposure draft for public comments.

The Chairman of the AGEB, Mr. Farrukh Raza, stated: “I would like to express my appreciation to all the members and the secretariat, as well as, the relevant working group for their commitment towards the cause of AAOIFI, despite their eventful work agendas and engagements.” He added: “There are significant risks of Shariah non-compliance and fraudulent practices in the crowdfunding industry, therefore, I am pleased that the board initiated this project to ensure good governance in the whole process. With proper governance, Islamic crowdfunding shall flourish and offer new investment opportunities to retail investors and businesses. It will also reduce the potential risk to the reputation of Islamic finance industry. ”

On this occasion, Mr. Omar Mustafa Ansari, the Secretary General, AAOIFI stated: “I am very pleased to mention that in the recent strategy plan for development of the governance standards, the AGEB has assigned due significance to the role of technology in changing the future of Islamic finance, either by changing the business model of the IFIs or by introducing new business models and newer types of Islamic financial service institutions. The initiatives include multiple projects related to Islamic fintech, and this is our first deliverable to the market in this regard, whereby a lot more will follow InshaAllah”.

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