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

A comprehensive Sharia governance framework includes: the SSB for product approval and fatwa issuance, internal Sharia review/audit for compliance verification, a dedicated compliance function, and Sharia risk management processes.

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

Sharia audit is a specialized review that examines compliance with Sharia principles, SSB fatwas, and AAOIFI standards, in addition to conventional audit procedures for financial accuracy and operational controls.

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

When non-compliance is discovered: the transaction must be identified and documented, income derived from it must be donated to charity (purification), corrective measures implemented, and the SSB and management notified.

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

SSB members must have advanced Islamic jurisprudence knowledge (specifically in commercial transactions/Fiqh al-Mu'amalat), understanding of modern financial instruments, and must be independent of the institution's management.

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 compliance is involved from the earliest product concept stage through structure design, contract documentation, SSB approval before launch, and ongoing post-launch monitoring for continued compliance.

CIFE Islamic Finance Practice Test

CIFE Islamic Finance Practice Test

CIFE Sharia Governance and Compliance