1.A Bank offering Islamic financial services must have in place adequate systems and controls, including a Shari’a Control Committee, to ensure compliance with Shari’a provisions. This includes policies and procedures for the approval of Islamic products, contracts and activities.
2.A Bank offering Islamic financial services must keep track of income not recognized arising from Shari’a non-compliance and assess the probability of similar cases arising in the future. Based on historical reviews and potential areas of Shari’a non-compliance, the Bank must assess potential profits that cannot be recognized as eligible Islamic Banking profits.
3.A Bank offering Islamic financial services must undertake a Shari’a compliance review at least annually, performed either by a separate Shari’a Audit function or as part of the existing internal and external audit function by persons having the required knowledge and expertise. The objective must be to ensure that the nature of the Bank’s financing and equity investment and its operations are executed in adherence to the applicable Shari’a rules and principles as per the fatwa, policies and procedures approved by the Shari’a Control Committee in accordance with the requirements set by the Central Bank and the Higher Shari’a Authority.
4.A Bank offering Islamic financial services must establish and implement a clear and formal policy for undertaking its different and potentially conflicting roles in respect of managing different types of investment accounts. The policy relating to safeguarding the interests of its investment account holders may include but is not limited to:
a.Identification of investing activities that contribute to investment returns and taking reasonable steps to carry on those activities in accordance with the Bank’s fiduciary and agency duties and to treat all its fund providers appropriately and in accordance with the terms and conditions of its investment agreements;
b.Allocation of assets and profits between the Bank and its investment account holders must be managed and applied appropriately to investment account holders having funds invested over different investment periods;
c.Determination of appropriate reserves at levels that do not discriminate against the right for better returns of existing investment account holders; and
d.Limiting the risk transmission between current and investment accounts.
5.A Bank offering Islamic financial services must adequately disclose information on a timely basis to its investment account holders and the markets in order to provide a reliable basis for assessing its risk profile and investment performance.
6.A Bank offering Islamic financial services must maintain separate accounts in respect of the Bank’s operations undertaken for restricted investment account holders and ensure proper maintenance of records for all transactions in investments.