Shariah Audit & Shariah
Non-Compliance Reporting
for Islamic Financial Institutions

SIDC CPE - accredited: 10 CPE Points
Date: 19th July 2017 Venue: InterContinental Hotel, Kuala Lumpur
Conference Guide

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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.


  • 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



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


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


2.00pm – 3.00pm

Session 2 (continued)

Shabnam Mokhtar — Group EVP, SHAPE Knowledge Services

3.00pm – 3.30pm


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


Coffee and Networking