High Sharia Supervisory Board - 2019 - Instructions No. 15 Regarding the Sharia Supervisory Board

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Palestine Monetary Authority
PALESTINE MONETARY AUTHORITY

Instructions No. (15) 2019
Regarding the Sharia Supervisory Board

Based on the provisions of Law No. (9) of 2010 concerning Banks, particularly Articles (23), (24), and (72) thereof,

In accordance with the powers delegated to us,

And in pursuit of the public interest,

We have issued the following Instructions:

Article (1)
Definitions

• Sharia Supervisory Board: The body appointed in the Islamic Bank pursuant to the provisions of Article (24) of Law No. (9) of 2010 concerning Banks.
• High Sharia Supervisory Board: The body appointed by decision of the Monetary Authority pursuant to the provisions of Article (23) of Law No. (9) of 2010 concerning Banks.
• Sharia Auditor: The person appointed pursuant to the provisions of Article (24) paragraph (7) of Law No. (9) of 2010 concerning Banks.

Article (2)
Scope of Application

The provisions of these Instructions apply to all Islamic Banks licensed by the Monetary Authority to conduct Islamic banking business in Palestine.

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Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452 Tel: +970 2 2415251 | Fax: +970 2 2415310 Gaza - Palestine P.O. Box 4026 Tel: +970 2 2825713 | Fax: +970 2 2844487

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Palestine Monetary Authority
PALESTINE MONETARY AUTHORITY

Article (3)
Duties of the Sharia Supervisory Board

The Sharia Supervisory Board must perform the following:

1. Provide a Sharia opinion on the extent to which new products and services that the Islamic Bank wishes to offer comply with Islamic Sharia provisions, prior to presenting them to the High Sharia Supervisory Board.
2. Ensure that periodic reports submitted to the Board of Directors, as well as annual and semi-annual reports submitted to the General Assembly, include a report from the Sharia Supervisory Board regarding the Bank's compliance with decisions issued by the High Sharia Supervisory Board.
3. Comply with Sharia standards, as well as accounting, auditing, governance, and ethics standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), and decisions of the High Sharia Supervisory Board.

Article (4)
Functions and Responsibilities of the Sharia Auditor

In addition to what is stipulated in Instructions No. (10) of 2017 concerning the Code of Best Practices for Bank Governance in Palestine, the Sharia Auditor is responsible for verifying the Bank's management compliance with decisions of the High Sharia Supervisory Board.

Article (5)
Responsibilities of the Islamic Bank's Management

The management of the Islamic Bank must perform the following:

1. Present any new products or services it wishes to offer to the High Sharia Supervisory Board, after they have been presented to the Sharia Supervisory Board. Decisions of the High Sharia Supervisory Board regarding these are binding on both the Bank's management and the Sharia Supervisory Board.
2. Comply with all decisions issued by both the High Sharia Supervisory Board and the Sharia Supervisory Board within the Bank, in addition to complying with Sharia standards, accounting, auditing, governance, and ethics standards issued by AAOIFI.
3. Comply with the Sharia opinion or fatwa issued by the High Sharia Supervisory Board.

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Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452 Tel: +970 2 2415251 | Fax: +970 2 2415310 Gaza - Palestine P.O. Box 4026 Tel: +970 2 2825713 | Fax: +970 2 2844487

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Palestine Monetary Authority
PALESTINE MONETARY AUTHORITY

4. Provide the Monetary Authority with a copy of the Sharia Auditor's quarterly report addressed to the Board of Directors of the Islamic Bank.

Article (6)
Mechanisms for Addressing and Communicating with the High Sharia Supervisory Board

The Islamic Bank must perform the following:

1. Address the Monetary Authority if the Bank wishes to obtain an opinion from the High Sharia Supervisory Board.
2. Submit a written request to the Monetary Authority to obtain approval from the High Sharia Supervisory Board for new products and services, provided that the request includes at minimum:
   a. The Sharia Supervisory Board's requests/observations within the Bank. b. Technical specifications, technical requirements, and internal controls.
   c. Pricing mechanism and methodology.

Article (7)
Repeal

Circular No. (2018/141) concerning the High Sharia Supervisory Board is repealed, and any provisions inconsistent with these Instructions are also repealed.

Article (8)
Implementation and Enforcement

All competent authorities shall implement the provisions of these Instructions, each within its respective jurisdiction. These Instructions shall take effect from the date of their issuance.

Issued in Ramallah on Tuesday, dated 31/12/2019

Supervision and Inspection Department
Palestine Monetary Authority

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3 www.pma.ps
Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452 Tel: +970 2 2415251 | Fax: +970 2 2415310 Gaza - Palestine P.O. Box 4026 Tel: +970 2 2825713 | Fax: +970 2 2844487