The IFSB Issues the Exposure Draft of the IFSB–AAOIFI Revised Sharīʻah Governance Framework for Institutions Offering Islamic Financial Services (ED-RSGF) for Public Consultation

31 March 2022, Kuala Lumpur – The Islamic Financial Services Board (IFSB) has today issued the Exposure Draft of the Joint IFSB-AAOIFI Revised Sharīʻah Governance Framework for Institutions Offering Islamic Financial Services (ED-RSGF) for Public Consultation for a period of sixty days, starting from 31 March 2022 until 23 June 2022. The IFSB invites comments from regulatory and supervisory authorities, international organisations, institutions offering Islamic financial services, academics, Sharīʻah scholars, and other interested parties.

The aim of this joint IFSB-AAOIFI standard is to provide a revised set of Guiding Principles on the key components of a sound and effective Sharīʻah governance framework for institutions offering Islamic financial services (IIFS). The specific objectives of this standard are to:

1. improve the quality of Sharīʻah governance while optimising the costs by providing comprehensive guidance on minimum and best practices for various elements of Sharī`ah governance;
2. help regulatory and supervisory authorities (RSAs) and IIFS fulfil their fiduciary responsibilities towards the various stakeholders regarding Sharīʻah compliance and governance;
3. provide greater harmonisation of Sharī`ah governance structures and practices across jurisdictions, especially since there are increasing numbers of IIFS with cross-border operations;
4. provide a higher level of transparency in Sharī`ah compliance of an IIFS by standardising and streamlining the process of issuance and implementation of Sharī`ah rulings and audit of the implementation of the same;
5. enhance public confidence in the Sharī`ah compliance of IIFS and reduce the reputational risk of Sharī`ah non-compliance through improved Sharīʻah governance structure, greater transparency and more effective accountability; and
6. complement the other standards issued by the IFSB and AAOIFI.

This standard applies to IIFS (including Islamic windows) in the Islamic banking, takāful (Islamic insurance) and Islamic capital market sectors. RSAs may choose to apply this standard to other IIFS in their jurisdictions. The standard adopts a principle-plus-rule approach that provides a comprehensive set of Sharīʻah governance practices for implementing each principle.

The IFSB will be conducting online public hearings as part of the public consultation process. Participation in the public hearing is free and open to all. The dates will be announced in due course.

The soft copy of ED-RSGF is available on the IFSB website, www.ifsb.org and the Secretariat invites all interested parties, especially members of the IFSB, to send their comments to the IFSB through email to [email protected] by 23 June 2022 at the latest.