Palestine Monetary Authority

Instructions No. (15) 2019

Regarding the Shariah Supervisory Board

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

and in accordance with the powers delegated to us,

and to achieve the public interest,

we have issued the following Instructions:

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Article (1)

Definitions

• Shariah Supervisory Board: The body appointed in the Islamic bank in accordance with the provisions of Article (24) of Legislative Decree No. (9) of 2010 concerning Banks.
• Supreme Shariah Supervisory Board: The body appointed by decision of the Palestine Monetary Authority in accordance with the provisions of Article (23) of Legislative Decree No. (9) of 2010 concerning Banks.
• Shariah Auditor: The person appointed pursuant to the provisions of Article (24), paragraph (7) of Legislative Decree No. (9) of 2010 concerning Banks.

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Article (2)

Scope of Application

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

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Article (3)

Duties of the Shariah Supervisory Board

The Shariah Supervisory Board shall perform the following:

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

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Article (4)

Duties and Responsibilities of the Shariah Auditor

In addition to the provisions set forth in Instructions No. (10) of 2017 concerning the Guide to Best Practices for Bank Governance in Palestine, the Shariah Auditor shall be responsible for verifying the bank management's compliance with decisions of the Supreme Shariah Supervisory Board.

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Article (5)

Responsibilities of the Islamic Bank Management

The Islamic bank management shall perform the following:

1. Presenting any new products or services it wishes to offer to the Supreme Shariah Supervisory Board, after presenting them to the Shariah Supervisory Board, with decisions of the Supreme Shariah Supervisory Board regarding them being binding on both the bank management and the Shariah Supervisory Board.
2. Complying with all decisions issued by both the Supreme Shariah Supervisory Board and the bank's Shariah Supervisory Board, in addition to complying with the Shariah standards, accounting, auditing, governance, and ethics standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
3. Complying with the Shariah opinion or fatwa issued by the Supreme Shariah Supervisory Board.

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Article (6)

Mechanisms for Correspondence with and Communication to the Supreme Shariah Supervisory Board

The Islamic bank shall perform the following:

1. Corresponding with the Palestine Monetary Authority if the bank wishes to obtain an opinion from the Supreme Shariah Supervisory Board.

2. Submitting a written application to the Palestine Monetary Authority to obtain approval from the Supreme Shariah Supervisory Board for new products and services, which shall include the following:

   a. The Shariah Supervisory Board's opinions within the bank. b. Technical specifications and internal controls.
   c. Pricing mechanism and methodology.

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Article (7)

Repeal

Circular No. (2018/141) regarding the Supreme Shariah Supervisory Board is hereby repealed, and anything inconsistent with the provisions of these Instructions is also repealed.

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Article (8)

Implementation and Enforcement

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

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

Supervision and Inspection Department
Palestine Monetary Authority

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Note:
Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452 info@pma.ps | Fax: +970 2 2415310 | Tel: +970 2 2415251 Gaza - Palestine P.O. Box 4026 Fax: +970 8 2844487 | Tel: +970 8 2825713 www.pma.ps