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Shariah governance

Shariah supervisory board

An independent panel of Shariah scholars that approves an institution's products and oversees its Shariah compliance.

A Shariah supervisory board, often simply called the Shariah board, is an independent body set up or engaged by an institution offering Islamic financial services to supervise its Shariah compliance and governance system, as IFSB-31 defines it. Its members issue Shariah pronouncements on products and transactions and oversee review and audit of compliance. Regulators set rules on its appointment, composition and independence, and AAOIFI has governance standards on the board's appointment, functions and reporting.

Sources

This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.

Related terms

FatwaA juristic opinion on a Shariah question; in finance, usually a Shariah board's ruling on a product or transaction.Shariah governance systemThe institutional arrangements through which an institution ensures independent oversight of its Shariah compliance.Central Shariah boardA national or regulator-level Shariah authority whose rulings set or harmonise Shariah positions across a jurisdiction.Shariah reviewA regular compliance function that assesses whether an institution's operations follow Shariah requirements.Shariah auditAn independent assessment of internal controls, risk management and overall Shariah compliance, usually by internal audit.