Proposal For National Panels To Oversee Islamic Financial Instruments Draws Criticism

A plan put forward by the Accounting & Auditing Organization for Islamic Financial Institutions (AAOIFI) to create separate national Shariah boards to oversee the sale of Shariah-compliant financial instruments is drawing criticism from lawyers and bankers. Bloomberg reported yesterday that the proposal to appoint panels of experts in each country to rule on whether the instruments comply with the requirements of Islamic law is seen as adding a layer of bureaucracy in the $1 trillion Islamic finance industry. AAOIFI says that the proposal is a move toward standardization in the industry. Advisory boards for separate financial institutions will create products that will then be approved by a single national body, which in turn it hopes will create greater investor confidence.