The global Islamic finance industry can expect an international governance standard for Shariah compliant crowdfunding activities in the near future as the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) prepares to publish an exposure draft this year.
AAOIFI confirmed that its Governance and Ethics Board has held a discussion to review and deliberate on conceptual issues regarding Islamic crowdfunding, which it acknowledged is growing in influence as an alternative source of funding in the industry.
“With the advent of technology and the new matchmaking opportunities for investors and businesses, a significant risk of scams and fraudulent practices in this nascent industry is also emerging. Without proper governance, Islamic crowdfunding runs the risk of causing reputational damage to the Islamic finance industry,” the standard-setting body noted.
The secretariat has been directed to incorporate changes and circulate the revised draft to the board for further comments. The board expects to finalize the draft in the next meeting on a priority basis.
“I am pleased that the board has put a great effort in improving the draft of [the] Islamic crowdfunding governance standard in this meeting. We expect this exposure draft will be issued within this year,” Omar Mustafa Ansari, the secretary-general of AAOIFI, shared.
AAOIFI at the end of 2020 confirmed in an article in IFN that it was working on an Islamic crowdfunding governance standard, which would cover areas such as cybersecurity among others.