Bank Islam Integrated Annual Report 2020

8. SHARIAH GOVERNANCE (CONTINUED) 8.2 Shariah Risk Management (continued) Extensive and continuous Shariah risk awareness initiatives have been conducted for the Group’s staff including Shariah sessions for Risk Controllers (“RC”) namely Shariah Town Hall sessions where the sessions updated the RCs on new Shariah requirements/rulings issued either by Shariah Division, the SSC or the regulators or upon any occurrence of Shariah non–compliance event. In year 2020, 6 Shariah risk awareness sessions were conducted which gathered almost all sale personnel from branches. Apart from that, it is compulsory for all staff to participate in Shariah training via e-Learning every two years as a refresher course. 8.3 Shariah Non-Compliance (“SNC”) Events An SNC event is a result of the Group’s failure to comply with the Shariah rules and principles determined by the SSC. Throughout the year 2020, there was one (1) incident confirmed by the SSC as SNC event. The SNC event was due to lack of awareness on related Shariah requirements for products offered. The Group, from time to time, makes efforts to prevent similar Shariah breaches from recurring by issuing reminders, conducting on-going awareness trainings, as well as putting additional controls to ensure compliance with Shariah requirements. 8.4 Shariah Non-Compliant Income 31 December 2020 31 December 2019 RM59,960.47 RM89,339.69 The main contributors of the SNC income are: Commissions from third party investment product offering (RM52,645.36) and commissions from Shariah non- compliant merchants of card business (RM7,226.61). The amount was disposed to charitable causes upon Shariah Supervisory Council’s approval. All SNC events and rectification plans were presented and approved by Board/SSC and reported to BNM in accordance with the prescribed reporting requirement by the regulator. 9. INVESTMENT ACCOUNT 9.1 Overview Islamic Financial Services Act 2013 (“IFSA”) distinguishes investment account (IA) from Islamic deposits, where Shariah contracts that need to be applied for IA products are non-principal guaranteed, while Shariah contracts for deposit products are principal guaranteed. In line with the implementation of the IFSA, the Group has developed investment account products based on Mudarabah and Wakalah contracts. Mudarabah is a contract between a customer as capital provider and the Group as an entrepreneur under which the customer provides capital to be managed by the Group and any profit generated is shared according to a mutually agreed profit sharing ratio (PSR) whilst financial losses are borne by the customer provided that such losses are not due to the Group’s misconduct, negligence or breach of specified terms. PILLAR 3 DISCLOSURE as at 31 December 2020 370 Financ ial Statement s Accountabi l i t y Addi t ional Informat ion