Regulatory Alerts2020-02-12
Circular on the Shariah Governance Framework for Local Banks Operating in Saudi Arabia
The Saudi Arabian Monetary Authority issued this circular to establish a minimum Shariah governance framework for local banks operating in the Kingdom, mandating clear roles for boards, executive management, and Shariah committees to ensure compliance with Islamic financial principles. The framework requires banks to implement structured policies, appoint qualified independent Shariah committee members, and maintain robust internal controls, risk management, and audit functions to mitigate non-compliance risks. Effective from August 9, 2020, banks must submit an implementation plan within one month and adhere to transitional provisions for specific regulatory materials while continuously evaluating their Shariah compliance posture.
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