After giving its initial greenlight in June, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has finally approved to issue the exposure draft of governance rules on Islamic crowdfunding, providing a global guidance on one of the fastest-growing Islamic fintech verticals.
The new standard covers governance and control systems including but not limited to compliance with Shariah principles and rules, safeguarding the interest of various stakeholders, controls relevant to the information technology and data protection, etc.
“The Islamic finance industry is keen to keep pace with the recent developments in fintech and we are aware that additional layers of challenges and obstacles exist in terms of both Shariah and governance,” shared Farrukh Raza, the chairman of the AAOIFI Governance and Ethics Board (AGEB). “Islamic crowdfunding has proven to be an essential source of alternative finance over the past few years. I anticipate that it will play a significant role in shaping the way Islamic finance operates in the coming years. Since it is a matter of public money, AGEB is of the view that it is necessary to ensure good governance in the whole process to avoid putting Islamic crowdfunding at risk, potentially causing reputational risk to the whole Islamic finance industry.”
Public hearings for the standard will be held in the upcoming months.
“I am optimistic that the governance standard on Islamic crowdfunding will assist in developing a strong governance practice in the industry, [and] thereby, promote trust among stakeholders. This will eventually lead to a just and equitable model of Islamic finance based on such structures,” said Omar Mustafa Ansari, the secretary-general of AAOIFI. “AGEB has taken multiple initiatives for the development of standards in different areas of fintech. The governance standard on Islamic crowdfunding is the first of such projects.”