BNM releases exposure draft to enhance syariah governance

Bank Negara Malaysia building in Kuala Lumpur. FAIHAN GHANI/The Star.

KUALA LUMPUR: Bank Negara Malaysia (BNM) has released an exposure draft aimed to enhance existing regulatory requirements and expectations on syariah governance for Islamic financial institutions.

“The draft aims to strengthen the effectiveness of syariah governance implementation within Islamic financial institutions due to the growing scale and complexity of Islamic financial business alongside recent policy developments in the area of governance, compliance and risk management,” BNM said on its website.

It said key enhancements to the framework comprised strengthening board oversight on accountability and responsibilities over syariah governance and enhancing requirements for the syariah committee in providing objective and sound advice to Islamic financial institutions, in line with the Islamic Financial Services Act 2013.

The central bank said other improvements included enhancing expectations for the board and senior management to promote a syariah-compliant culture and further integrate syariah governance considerations in business and risk strategies, and improving the quality of internal control functions to ensure effective management of syariah non-compliance risks.

“The bank invites written feedback on the proposed regulatory requirements, including suggestions and alternative proposals,” it said.

Responses must be submitted to BNM by Dec 11, 2017, to [e-mail], it added. - Reuters