Page 82 - EXIM-Bank_Annual-Report-2023

EXIM BANK MALAYSIA
80 A Vision to Serve Empowering Growth Management Discussion and Analysis
ANNUAL REPORT 2023
Disclosure on shariah Governance

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 Bank’s Shariah
Committee (SC) and provide mitigation measures 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 a requirement outlined
in BNM Policy Document on Operational Risk Reporting (ORR).

In managing SNC risks, Shariah Risk function leverages on the same principles, processes and tools of operational risk management
such as Risk and Control Self-Assessment (RCSA), Key Risk Indicators (KRI) and Loss Event Data (LED), which facilitated by the
automation system known as EXIM Governance, Risk & Compliance (GRC) System, where the enhancement has been undertaken in the
year 2023 in encompassing the Shariah compliance elements, in addition to Operational Risk and Business Continuity Management.
The enhancement made focused on the effectiveness of system application and data completeness to further improve the
management of risk profiles for all business and support units, thus reducing the probability of SNC or Shariah-related events.

Shariah Review
Dedicated Shariah review of the Bank is established under the purview of Compliance Department, which undertake the roles
of conducting regular review to ensure the Bank’s businesses, operations, affairs and activities of Islamic Banking and Takaful are
conducted in compliance with Shariah requirements, as per the BNM’s SAC and the Bank’s Shariah Committee’s resolution.
Shariah review of the Bank consists of Shariah qualified officers to carry out Shariah review functions in evaluating the 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 the Bank, which resides under the Audit & Assurance Department (AAD), bears the responsibility to provide
independent assessment on the quality and effectiveness of the Bank’s internal control, risk management systems, governance
processes, as well as overall compliance of the Bank’s operations, business, affairs and activities with Shariah requirements.
Shariah Audit is classified as a regulatory audit with the execution guided by an annual audit plan and programme prepared by
AAD.

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