AAOIFI issues the final standard on “Code of ethics for Islamic finance professionals” for industry adoption

15 January 2020, Manama, Kingdom of Bahrain - The Governance and Ethics Board (AGEB / the board) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) approved the issuance of the final standard on the “Code of ethics for Islamic finance professionals”.

This marks the completion of the first of the four key documents AAOIFI has planned to develop as part of its comprehensive Ethics project which commenced in January 2017. The other three related documents include a governance standard on the implementation of the code to facilitate the Islamic Financial Institutions (IFIs) in developing a robust ethics infrastructure for institutionalisation of ethics; a handbook comprising of real-world and/or hypothetical case studies to help the Islamic finance professionals strengthen their understanding of ethics and develop their ability to successfully navigate themselves out of ethical difficulties or dilemmas; and an ethics code but specifically targeting the financial institutions offering Islamic finance products and services.

The newly issued code of ethics supersedes the two standards on ethics previously issued by AAOIFI in 1999 and 2001, respectively. The purpose of developing a new code is to provide the Islamic finance professionals with a better and more comprehensive understanding of the concept of ethics; structure it in a simple and easy-to-understand format; and most importantly, accomodate the industry needs, expectations, and requirements. For the same, face-to-face interviews were conducted in multiple jurisdictions with diverse stakeholders involving members of various boards (directors and scholars), senior management, and staff members of IFIs, as well as the industry regulators. Online questionnaire and public hearings were also conducted at various stages in the standard’s development process to ensure maximum outreach and participation.