Leveraging Technology in Shariah Compliance Mujtaba Khalid

The Increasing Cost of Compliance

2017 2022

4% of Revenue

10% of Revenue

$80 billion

$120 billion

*

*

*Global Regulatory Outlook Report 2017Thomson Reuters Regulations Report 2017

The Cost of non-Compliance

Thomson Reuters

Adoption of new technologies to facilitate the delivery of regulatory requirements

Trends in RegTech

RegTech Investments 2012 – 2016 (USD) Global RegTech Investments Q1 2016 – Q1 2017 (USD)

RegTech Investments by Sub-sector 2014 – Q1 2017 (USD)

The Islamic Finance Industry

Islamic Finance Transactions

Shariah Compliant

Transaction

Shariah Principles

Regulatory Requirements

Standards

Shariah Non-Compliance Vs Net Income

BANK CUSTOMER

PROJECT

MUSHARAKAH

IJARAH

Capital Contribution

Capital Contribution

Initial Equity Ratio80:20

Bank’s Portion

Stage 1

BANK CUSTOMER

PROJECT

MUSHARAKAH

IJARAH

Middle Stages

Capital Contribution

Capital Contribution

Equity Ratio40:60

Bank’s Portion

BANK CUSTOMER

PROJECT

MUSHARAKAH

IJARAH

Close of Contract

Capital Contribution

Capital Contribution

Equity Ratio0:100

SALE

Leveraging Smart Contracts