AAOIFI and Ernst and Young to cooperate on Islamic core banking system certification

The certification program will see AAOIFI and Ernst & Young working together in benchmarking financial software products or core banking systems against AAOIFI's Shari'a and Accounting standards. Under the certification program, banking and financial information technology providers will have the opportunity to properly incorporate AAOIFI standards in their products and systems.

Dr. Khaled R Al Fakih, Secretary General and CEO of AAOIFI said that "AAOIFI certification ensures that information technology systems in Islamic financial institutions can give further support to those institutions and mitigate risks of Shari'a non-compliance."

He also added that the certification process, which also involves regular periodical review, will be carried out under the supervision of a committee of Shari'a scholars from AAOIFI standards boards.

Essa Al-Jowder, Partner, Ernst & Young views the development as a game-changer for the Islamic banking industry. "Regulators are becoming increasingly stringent when it comes to Shari'a compliance. Core banking vendors have to adapt their systems to incorporate the unique features and processes of Islamic products. Such an endorsement should ideally come from a credible organization like AAOIFI. Given the need for a combination of Shari'a, IT, accounting and banking skills and experience, Ernst & Young's industry credentials are the ideal fit for this joint initiative. We believe that this is an important step for the industry and will go a long way to help reduce operational risk of Islamic banks," stated Mr. Al-Jowder.

AAOIFI has issued 88 standards in the areas of Shari'a, accounting, auditing, ethics, and governance for international Islamic finance. Its standards are currently followed by most of the leading Islamic financial institutions across the world and have introduced a progressive degree of harmonisation of international Islamic finance practices.

Ernst & Young is a global leader in assurance, tax, transaction and advisory services with more than 167,000 people across 140 offices worldwide. The MENA practice of Ernst & Young has been operating in the region for 90 years. Bahrain hosts Ernst & Young's Global Islamic Banking Center of Excellence where a dedicated team of senior Islamic finance professionals serves the industry globally.