Shariah audit has long been an issue of significant importance for Islamic financial institutions in Malaysia. However, with the recent revision and expansion of Shariah governance requirements, the scope, nature, responsibility and accountability of Shariah audit (and compliance) has changed substantially. Closely associated to this is the important principle of Shariah non-compliance: by offering Islamic banking and finance products, Shariah non-compliance is a fundamental, inherent and key risk for Islamic financial institutions of all kinds. The concept of non-compliance, and the onus it creates has recently become more significant by being explicitly tied to important Islamic banking legislation, such as Islamic Financial Services Act 2013. Indeed, Section 28 (3) of IFSA 2013 sets out clearly the obligations and responsibilities of a financial institution in the case Shariah non-compliance, and the subsequent reporting and disclosure process. Penalties and consequences of not following Shariah non-compliance reporting procedures can be severe.
This timely one day seminar updates and reviews recent Shariah audit, compliance and governance requirements under Malaysian law. It also discusses the role of Shariah audit and compliance, specifically the obligations, procedures, disclosure and reporting requirements and rectification options in the case of Shariah non-compliance.
KEY LEARNING OUTCOMES
An update of Regulatory Issues Concerning Shariah Audit, Governance and Shariah Non-Compliance Reporting
Identifying Shariah Audit, Compliance and Governance Roles and Requirements within an Islamic Financial Institution
Building Effective Shariah Audit and Risk Management Practices in Today’s Regulatory Environment
Procedures, Obligations and Responsibilities of Shariah Non Compliance Reporting
Rectification Options in the Situation of Shariah Non Compliance Reporting
Benefits of Attending
Reviewing the regulatory framework concerning Shariah audit, compliance and Shariah non-compliance reporting
Analysing the roles and responsibilities of Shariah audit and compliance in today’s regulatory environment
Assessing the execution of Shariah audit, governance and compliance functions across banking products and businesses
Understanding standards and the legal framework for Shariah non-compliance reporting (SNC), and identify legal obligations and responsibilities
Defining the course of action at the point of identification of SNC, and the rectification plans and options available to the bank at that point
Who Should Attend
Islamic bankers and management
Shariah advisers, officers, control and review staff
Compliance officers and in-house counsel
Risk managers
Product development officers
Operations managers
Consultants and advisors
Financial audit and review team members
Regulators and supervisory bodies
Agenda
9.15am – 11.15am
Session 1: Shariah Audit, Compliance and Governance Requirements for Shariah Non-Compliance Risk Management and Reporting
Examining recent regulatory requirements on Shariah audit, compliance and Shariah non-compliance reporting under the following:
Central Bank Act 2009
Islamic Financial Services Act 2013
AAOIFI
IFSB
Shariah Governance Framework and recent revisions
Implications of each of the above for Shariah audit, risk management and Shariah non-compliance reporting functions within an Islamic financial institution
Revisions to the Shariah Governance Framework and disclosure requirements in 2017 from an audit, compliance and non-compliance reporting perspective
Recent regulatory revisions to the role of the Shariah officer in an Islamic financial institution
Obligations, responsibilities of boards and directors and senior bank management, and penalties for Shariah non-compliance infringement
Associate Professor Dr Rusni Hassan — Deputy Dean IIUM Institute of Banking & Finance and former member, Shariah Advisory Council, Bank Negara Malaysia
11.15am – 11.45am
Coffee
11.45am – 1.00pm
Session 2: Examining the Roles and Responsibilities of Shariah Audit & Shariah Compliance Units in Islamic Financial Institutions
Undertaking and building effective Shariah audit and risk assessment and management practices: people, systems, procedures and documentation
Types and common examples of Shariah risks inherent in Islamic financial institutions: product flaws in documentation or structure, Islamic banks’ practices vs. regulatory requirements and other potential flashpoints
Analysing product endorsement and approval procedures from a Shariah audit and compliance perspective
Audit, disclosure and reporting requirements in Malaysia: Practical issues with Shariah audit and non-compliance reporting within Islamic Banks
Hot spot areas or activities which will trigger Shariah non-compliant risk in Islamic banks
Shabnam Mokhtar — Group EVP, SHAPE Knowledge Services
1.00pm – 2.00pm
Lunch
2.00pm – 3.00pm
Session 2 (continued)
Shabnam Mokhtar — Group EVP, SHAPE Knowledge Services
3.00pm – 3.30pm
Coffee
3.30pm – 4.45pm
Session 3: Assessing Procedures, Obligations and Responsibilities of Shariah Non-Compliance Reporting
Identifying the obligations of Islamic Financial Institutions for Shariah non-compliance reporting
Discussing practical issues and procedures for SNC reporting
Evaluating information disclosure requirements for SNC
Understanding rectification measures open to an Islamic financial institution: options and procedure, non-halal income management and purification
Assessing the consequences of failure to report SNC
Ahmad Nazri Ismail — Head, Group Shariah Risk Management, RHB Banking Group
