CIFE Sharia Governance and Compliance

Question 1

What are the key components of a Sharia governance framework for Islamic financial institutions?

Accepted Answer

Sharia Supervisory Board, internal Sharia review/audit, Sharia compliance function, and Sharia risk management

Answer

Only a Sharia board is needed

Answer

Governance is the same as conventional banking

Answer

Only government oversight is needed

Question 2

What is a Sharia audit and how does it differ from a conventional internal audit?

Accepted Answer

A Sharia audit specifically examines whether all activities, products, and transactions comply with Sharia rulings and the SSB's fatwas, in addition to conventional audit procedures

Answer

They are identical processes

Answer

Sharia audit only reviews financial statements

Answer

Sharia audit is performed by external auditors only

Question 3

What happens when a Sharia non-compliance event is discovered?

Accepted Answer

The income from the non-compliant transaction must be identified, the situation corrected, the income donated to charity, and the SSB notified

Answer

It is ignored if the financial impact is small

Answer

The transaction is simply reversed

Answer

Only the regulator needs to be informed

Question 4

What qualifications are required for Sharia Supervisory Board members?

Accepted Answer

Advanced knowledge of Islamic jurisprudence (Fiqh al-Mu'amalat), understanding of modern financial products, and independence from the institution's management

Answer

Any business degree is sufficient

Answer

Only Arabic language skills

Answer

Banking experience without Islamic knowledge

Question 5

What is the role of Sharia compliance in product development for Islamic financial institutions?

Accepted Answer

All new products must receive SSB approval before launch, with Sharia compliance involved from initial concept design through structuring, documentation, and ongoing monitoring

Answer

Sharia review happens only after product launch

Answer

Only the marketing department handles compliance

Answer

Product development follows conventional banking processes

Question 6

What is the concept of Sharia risk in Islamic financial institutions?

Accepted Answer

The risk of financial loss or reputational damage from failure to comply with Sharia principles, including invalid contracts, non-compliant income, and loss of customer confidence

Answer

Islamic finance has no unique risks

Answer

Only financial market risk

Answer

Risk of losing Sharia board members