Islamic Banking Governance Framework

FAB is supervised from a Shariah perspective by an Internal Shariah Supervision Committee (“ISSC”). The appointment of the ISSC members is endorsed by FAB Group Board of Directors and approved by the Higher Shariah Authority (“HSA”) of the Central Bank of UAE (“CBUAE”) and the General Assembly of the Bank.

The ISSC consists of renowned and qualified Shariah scholars who are responsible to review and ensure that all FAB’s Islamic banking products, services and operations are in compliance with the Shariah principles.

The ISSC operates in accordance with the resolutions, standards and guidelines issued by the Higher Shariah Authority of the Central Bank of the UAE (HSA) who among others adopted the Shariah Standards issued by the Accounting & Auditing Organization for Islamic Financial Institutions. The ISSC also supervises the Bank’s Islamic subsidiaries i.e. First Abu Dhabi Islamic Finance as well as Islamic Banking operations in international locations including KSA, APAC and Europe in all matters related to Shariah.

FAB implemented the Shariah Governance Standards issued by CBUAE in its Shariah Governance Framework. Under the framework, there is a clear segregation between Islamic business, Shariah control and Shariah audit (3 lines of defense) through the establishment of Internal Shariah Control and Internal Shariah Audit departments that report to the Board of Directors. This will avoid any conflict of interest between the 3 important lines and put in place the required check and balance in ensuring all Islamic banking activities are done as per the relevant Shariah guidelines and regulations. The regulation also requires direct involvement of Board of Directors and its committees such as Board Risk & Compliance Committee and Board Audit Committee in the Shariah governance framework which further strengthen the effectiveness the framework.

All Islamic banking products are reviewed by the Internal Shariah Control department to ensure that the products meet all Shariah requirements laid by the ISSC and HSA before they are approved by the ISSC and HSA (as applicable). The Internal Shariah Audit department conducts Shariah audit on the Islamic banking activities to provide assurance. FAB also has dedicated Islamic Treasury, Finance (Islamic) and an Islamic Asset and Liabilities Committee (Islamic ALCO) that manages the overall Islamic assets and liabilities of the Bank in accordance with the guidance and requirements of the ISSC and HSA.