Shariah Advisory Process
1
Client Consultation / Engagement– Understand the client’s business model, objectives, and scope of the product or service.
– Identify the purpose and structure of the financial product or transaction.
– Define the Shariah advisory services needed (product structure, screening and certification)
2
Shariah Review & Analysis– Conduct a detailed analysis of the business activity, transaction documents, contracts, and procedures.
– Screen for Non-Compliant Elements like riba (interest), gharar (uncertainty), maysir (gambling), or involvement in haram (prohibited) industries.
3
Structuring & Recommendation– If the product or service is not Shariah-compliant, recommend necessary modifications or restructuring.
– Propose a Shariah-compliant structure (e.g., mudarabah, musharakah, ijarah, wakalah, murabahah, etc.)
– Suggest terms and clauses to include in contracts for compliance.
4
Shariah Endorsement / Fatwa Issuance– Present the structured proposal to a Shariah Supervisory Board (SSB) or independent Shariah scholar(s) for approval.
– After review and discussion, the board may issue a Shariah resolution, approval, or fatwa confirming the compliance of the product.
5
Documentation Review– Ensure all legal and commercial documents (contracts, agreements, prospectuses) align with the Shariah-approved structure.
– Collaborate with legal teams to ensure compliance from both Shariah and regulatory perspectives.
6
Implementation Monitoring– Oversee the actual implementation of the product or transaction to make sure it adheres to the approved Shariah structure.
Sometimes this includes on-site reviews or participation in product launches.
7
Shariah Audit & Ongoing Compliance– Conduct regular Shariah audits to ensure continued compliance.
– Review financial statements, operations, and contracts periodically.
– Recommend corrective actions if any deviation is found.
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