The AAOIFI Governance and Ethics Board (AGEB) issues AAOIFI Governance Standard (GS) 23 “Application of Shari’ah Governance Principles to Islamic Finance Windows”

The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Governance and Ethics Board (AGEB / the board), in its 42^nd meeting, approved the Governance Standard (GS) 23 "Application of Shari'ah Governance Principles to Islamic Finance Windows".

GS 23 "Application of Shari'ah Governance Principles to Islamic Finance Windows" represents the sixth outcome of the comprehensive Shari'ah governance framework project, under which five AAOIFI GSs were previously issued in December 2024. The board decided to defer the finalisation of this standard to the current year in order to extend the public consultation period, aim for broader engagement with regulatory and supervisory authorities (RSAs), industry experts and other stakeholders. It was considered essential to ensure that the final standard reflects robust and proportionate governance requirements for Islamic finance windows, while effectively addressing the operational challenges faced by the Islamic finance windows.

This standard sets out the principles and requirements for the effective implementation of Shari'ah governance framework to Islamic finance windows, while prescribing certain specific governance requirements including those related to dealings with their conventional parent and allowing certain flexibilities in contrast to full-fledged Islamic financial institutions, considering the proportionality principle. It provides guidance on the governance structure, reporting and disclosure requirements and other essential aspects of Shari'ah governance for Islamic finance windows.

The chairman of AGEB, Mr. Farrukh Raza, stated: "I would like to thank the board members, the respective working group and the secretariat for their dedication and commitment to the development of this standard". He added: "I am confident that the issuance of this standard will ensure that Islamic finance windows' operations uphold integrity and Shari'ah compliance, while fulfilling their fiduciary responsibilities towards all stakeholders in a fair and transparent manner".

On this occasion, Mr. Omar Mustafa Ansari, Secretary General of AAOIFI, remarked: "I am pleased to announce the issuance of this standard, and I believe it will support greater harmonisation of Shari'ah governance practices across Islamic finance windows". He added: "I would like to express my sincere appreciation to the industry stakeholders who actively participated in two public hearings (held in English and Arabic languages), two roundtable sessions in English and provided written comments during the consultation process. The quality and depth of these contributions reflect a strong commitment by stakeholders to the growth and development of the Islamic finance industry".

GS 23 "Application of Shari'ah Governance Principles to Islamic Finance Windows" can be accessed by CLICKING HERE.