8. SHARIAH GOVERNANCE (CONTINUED) 8.2 Shariah Risk Management (continued) Being part of operational risk, Shariah risk management leverages on the same ORM principles, processes, and tools. The responsibility of managing SNCR is spearheaded by the Group’s Shariah Risk Management Unit (“SRMU”). In general, all ORM tools are extended to the process of managing SNCR. However, the tools are modified to suit the regulatory requirements on Shariah governance in order to provide a robust and consistent approach in managing SNCR. Extensive and continuous Shariah risk awareness initiatives have been conducted for the Group’s staff and Risk Controllers (“RC”) to ensure understanding towards Shariah requirements/rulings, effective identification of SNC risks, establishment of controls to prevent SNC event, and to keep updated on the latest Shariah requirements/rulings issued by Shariah Division, SSC and regulators, and any occurrence of Shariah non – compliance event. In the year 2023, six (6) Shariah risk awareness sessions were conducted involving Group’s staff from HQ and branches. In addition, it is compulsory for all staff to participate in Shariah training via e-Learning 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 as determined by the Bank’s Shariah Supervisory Council, as well as other relevant body or institution such as the Shariah Advisory Council of BNM, Securities Commission and Labuan Financial Services Authority. Throughout the year 2023, nil incidence confirmed by the SSC as SNC events. 8.4 Shariah Non-Compliant Income 31 December 2023 31 December 2022 RM38,479.65 RM39,312.59 The main contributors of the SNC income for 2023 were commissions from SNC merchants of card business (RM22,392.92) and commissions from third party investment product offering (RM7,878.49). The amount was disposed to charitable causes upon SSC’s approval. 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. 465 www.bankislam.com 1 2 3 4 5 6 7 8 9 FINANCIAL STATEMENTS
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