The document discusses leveraging technology in Shariah compliance. It notes that the cost of compliance is increasing and projected to rise to 10% of revenue for financial institutions by 2022. Non-compliance can also be very costly. RegTech investments and adoption of new technologies can help facilitate delivering regulatory requirements more efficiently. The Islamic finance industry also needs technologies to help ensure transactions comply with Shariah principles and standards. Smart contracts are discussed as one way to help automate processes in Islamic finance like Musharakah and Mudarabah agreements to increase compliance.

1. Leveraging Technology in Shariah
Compliance
Mujtaba Khalid

2. The Increasing Cost of Compliance
2017 2022
4% of Revenue
10% of Revenue
$80 billion
$120 billion
*
*
*Global Regulatory Outlook Report 2017
Thomson Reuters Regulations Report 2017

3. The Cost of non-Compliance
Thomson Reuters

5. Adoption of new technologies to facilitate
the delivery of regulatory requirements

6. Trends in RegTech
RegTech Investments 2012 – 2016 (USD)
Global RegTech Investments Q1 2016 – Q1 2017 (USD)

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

8. The Islamic Finance Industry

9. Islamic Finance Transactions
Shariah
Compliant
Transaction
Shariah Principles
Regulatory Requirements
Standards

10. Shariah Non-Compliance Vs Net Income

12. BANK CUSTOMER
PROJECT
M
U
S
H
A
R
A
K
A
H
I
J
A
R
A
H
Capital
Contribution
Capital
Contribution
Initial Equity Ratio
80:20
Bank’s Portion
Stage 1

13. BANK CUSTOMER
PROJECT
M
U
S
H
A
R
A
K
A
H
I
J
A
R
A
H
Middle
Stages
Capital
Contribution
Capital
Contribution
Equity Ratio
40:60
Bank’s Portion

14. BANK CUSTOMER
PROJECT
M
U
S
H
A
R
A
K
A
H
I
J
A
R
A
H
Close of
Contract
Capital
Contribution
Capital
Contribution
Equity Ratio
0:100
S
A
L
E

15. Leveraging Smart Contracts