What is the 'Islamic Financial Services Board - IFSB'

The Islamic Financial Services Board (IFSB) is an international standard-setting organization that promotes the soundness and stability of Islamic banking, by issuing global prudential standards and guiding principles in the areas of capital adequacy, corporate governance, risk management and transparency, among others.

BREAKING DOWN 'Islamic Financial Services Board - IFSB'

The Islamic Financial Services Board (IFSB) is based in Kuala Lumpur, Malaysia, and began operations in early 2003. It was founded by a consortium of central banks and the Islamic Development Bank, with the goal of promoting the awareness of issues that could have an impact on the Islamic financial services industry. It issues Sharia-compliant standards, holds conferences and seminars, and provides guidance and supervision, among other initiatives.

While IFSB standards are mainly concerned with the identification, management and disclosure of risk related to Islamic financial products, another Islamic financial standards organ, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), sets best practices for handling the financial reporting requirements of Islamic financial institutions.

The ISFB consists of:

  • The general assembly, which includes all members of the ISFB
  • The council, which acts as the policy-making body of the IFSB and includes the senior executive of each full member of the organization
  • The technical committee, which advises the council on issues and consists of up to 15 persons appointed by the council
  • The working group, which drafts standards and guidelines and reports to the technical committee
  • The secretariat, which acts as the permanent administrative body and is headed by a secretary-general appointed by the council

As of December 2017, the IFSB had 185 members, including full members, associate members or observer members.

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