Page 76 - EXIM-Bank_Annual-Report-2022

A VISION COMMITMENT EMPOWERING ENSURING ENHANCINg FINANCIAL
74 EXIM BANK MALAYSIA ANNUAL REPORT 2022 TO SERVE TO LEAD GROWTH SUSTAINABILITY gOVERNANCE STATEMENTS 75

DISCLOSURE ON SHARIAH GOVERNANCE

Shariah Risk Management

Shariah risk management function is part of the Bank’s integrated risk management framework in line with the principles outlined
in the BNM’s Policy Document on Shariah Governance. The function is resided under Shariah & Operational Risk Department,
Risk Management Division. The main function of Shariah risk management is systematically to identify, measure, monitor,
control and report the Shariah non-compliance risks exposures associated with the operations, business, affairs, and activities
of the Bank. As part of control measures, the Bank shall endeavour a zero-tolerance approach on the non-compliance with the
Shariah principles and requirements as prescribed by the SAC BNM and Securities Commission Malaysia (SCM), as well as the
Shariah Committee.
Shariah risk is responsible for the development, maintenance and enhancement of the Shariah Risk Management governance,
policies and procedures and its implementation, including reporting of the Shariah non-compliance risk exposures to the
Management Audit, Risk and Compliance Committee (MARCC), Shariah Committee, Board Risk Committee (BRC), and the Board.

These also include the development and implementation of measures to elevate Shariah risk awareness within the Bank,
as well as ensure the purification of the tainted income due to non-compliance with Shariah requirements as guided by the
Shariah Committee and provide mitigation to avoid the recurrence of event(s) that could potentially result in SNC event.
The Shariah risk function also ensures that any incident of Shariah non-compliance is reported to BNM as requirement outlined
in BNM Policy Document on Operational Risk Integrated Online Network (ORION).
Shariah Review

Dedicated Shariah review of EXIM Bank is established under the purview of Compliance Department which undertake the
roles of conducting regular review to ensure EXIM Bank’s businesses, operations, affairs, and activities of Islamic Banking and
Takaful are conducted in compliance with Shariah requirements as per the BNM’s Shariah Advisory Council (SAC) and the
Bank’s Shariah Committee’s resolution.
Shariah review of EXIM Bank are consisting of Shariah qualified officers to carry out Shariah review functions in evaluating
EXIM Bank’s level of compliance to the Shariah, propose remedial rectification measures to resolve non-compliance and put
control mechanism to avoid recurrences.

Shariah review is guided by its Shariah Review Plan in performing regular review exercise to provide assurance to the
Senior Management, Shariah Committee, and the Board on the state of Shariah compliance in EXIM Bank.

Shariah Review Plan is developed mainly by the risk-based approach in evaluating the adequacy and effectiveness of the
policies and procedures emplaced in managing Shariah non-compliant and approved by relevant committees including
Shariah Committee. Subsequently, the outcome of Shariah review activities shall be reported periodically to the relevant internal
committees including the Shariah Committee.

Shariah Audit
Shariah Audit of EXIM Bank which resides under Audit & Assurance Department (AAD) bears the responsibility to provide an
independent assessment on the quality and effectiveness of EXIM Bank’s internal control, risk management systems, governance
processes as well as the overall compliance of the Bank’s operations, business, affairs, and activities with Shariah.

Shariah Audit is guided by annual audit plan issued by AAD. It is classified as regulatory audit which required to be conducted
every year.

Reporting independently to both the Board Audit Committee and the Shariah Committee, Shariah Audit provides
independent assurance on the effectiveness of internal control systems and related policies and procedures implemented by
EXIM Bank to govern the conduct of its Islamic financial business operations and activities. The scope of Shariah Audit is
established in line with the areas stipulated by BNM’s SGPD as well as accepted auditing standards.