SHARIAH GOVERNANCE We had approved in our meetings several initiatives undertaken by the Bank in strengthening its Shariah governance, including the review of the Group Shariah Compliance Policy, Shariah Marketing Guideline and Business Zakat Guideline. We had also approved the establishment of a new Hajah and Darurah Policy Document. Such initiatives aimed, among others, to set out the Shariah governance framework within the Bank to ensure our business operations were in line with the Shariah rules and principles. SHARIAH RISK MANAGEMENT (SRM) We had observed that the Bank continuously implemented appropriate measures in managing its Shariah non-compliance (SNC) risks. One of the significant measures was the implementation of Risk Control Self-Assessment (RCSA) which aimed to assess the significance of identified SNC risks and the effectiveness of the controls put in place within the respective functional areas. Since the introduction of RCSA, a continuous process of identifying and assessing SNC risks at various functional areas has been carried out by all Risk Controllers (RCs). The RCs have been also responsible for initiating, driving and implementing appropriate controls to mitigate any SNC events while achieving the business objectives of their respective areas. Based on SRM continuous risk assessment, the SNC risk exposures of the Bank were duly tabled in the Management Risk Control Committee and then in our SSC meetings for monitoring and oversight purposes. SRM also recognises the importance of fostering a strong Shariah compliance risk culture within the Bank, by instilling and promoting compliance with Shariah relevant operations, business, affairs, and activities. In this regard, SRM successfully conducted a series of training and knowledge-sharing sessions this year, specifically tailored to critical business functions. These sessions were designed to ensure that staff members understand Shariah requirements and principles and the application within their respective roles. In the year 2024, SRM also achieved significant improvements in key processes related to managing SNC Events and SNC Income, making these processes more systematic, effective, and efficient. First, the introduction of the Possible Shariah Issue (PSI) Guidance aimed to strengthen SRM’s ability to screen potential Shariah issues before the following stage of investigating and confirming any Potential Shariah Non-Compliance (PSNC). Second, the enhancement of the Risk Loss Event Management and Reporting Guidelines focused on refining SNC Income Management procedures to streamline the processes for all stakeholders involved. Finally, SRM and Shariah Compliance Department (SCD) had completed a joint review of the Bank’s selected Commodity Trading Provider (CTP). The review is primarily to help the SSC to assess the Shariah compliance of the CTP according to BNM’s Policy Document (PD) on Tawarruq, besides maintaining continuous and effective engagement with CTPs. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 274 Report of the Shariah Supervisory Council
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