IslamicFinance.de

An independent legal entity should oversee the way in which Islamic financial institutions certify they are following Sharia principles, Kuwait’s central bank governor Mohammad Al Hashel has said. Currently, boards of Sharia scholars at financial institutions rule on whether activities and products follow religious principles and they are also involved in audits. At the same time, the scholars are on the payroll of the Islamic banks which they vet, an arrangement contrary to good governance. The growing role of Islamic finance in some national economies is now prompting government watchdogs to pay more attention to the sector. Clear and specific professional frameworks for the duties and responsibilities of Sharia authorities and their audit function are needed.