1. From Islamic Studies to Islamic Finance
How did your background in Shari’ah, Common Law, and Islamic Studies lead you to Shari’ah compliance and audit?
My background in Shari’ah, Common Law, and Islamic Studies provided a strong foundation for my career in Islamic finance. My knowledge of Islamic jurisprudence, particularly Fiqh al-Mu’amalat, helped me understand the principles governing commercial transactions, while my exposure to Common Law strengthened my understanding of contracts, legal obligations, and regulatory compliance.
I became particularly interested in how Islamic principles could be translated into practical financial products and institutional operations. This naturally led me to Shari’ah compliance and audit, where I can bridge the gap between Islamic jurisprudence and modern financial practices.
For me, Islamic finance is not merely about avoiding interest; it is about promoting fairness, transparency, accountability, and ethical wealth creation.
2. The Shari’ah Auditor’s Role
What does a typical Shari’ah audit involve, and what are the most common compliance issues you encounter?
Shari’ah audit involves independently examining an institution’s products, transactions, contracts, and operations to determine whether they comply with applicable Shari’ah principles and approved Shari’ah decisions.
My audit activities typically involve reviewing financing documentation, transaction sequences, profit calculations, disbursements, fees, and operational procedures.
Some common issues include improper implementation of Murabahah transactions, inadequate ownership documentation, inappropriate charges, deviations from approved product structures, and poor treatment of non-permissible income.
I believe Shari’ah audit should go beyond identifying violations. It should also establish their root causes, recommend corrective measures, and strengthen internal controls to prevent recurrence.
3. Shari’ah Governance in Non-Interest Microfinance
How does Shari’ah governance work in a non-interest microfinance bank, and how does it differ from a full-fledged Islamic bank?
Shari’ah governance is the framework through which an institution ensures that its activities comply with Islamic commercial principles.
It involves the Board of Directors, Advisory Committee of Experts (ACE), Shari’ah Compliance function, Shari’ah Audit function, and management.
The ACE provides Shari’ah guidance and rulings, the compliance function monitors day-to-day activities, while Shari’ah audit independently assesses the institution’s level of compliance.
The major difference between a non-interest microfinance bank and a full-fledged non-interest commercial bank is primarily their licensing scope, operational scale, and target market.
Microfinance banks focus more on microenterprises, small businesses, and underserved communities, whereas commercial banks undertake broader banking activities.
However, the fundamental Shari’ah governance principles remain the same: accountability, independence, transparency, and adherence to Shari’ah requirements.
4. Dual Compliance
How do you manage Shari’ah compliance alongside AML/CFT and regulatory requirements? Where do they intersect or conflict?
I consider Shari’ah compliance, AML/CFT, and regulatory compliance complementary rather than competing responsibilities.
Both Islamic commercial jurisprudence and AML/CFT frameworks emphasise transparency, accountability, the prevention of fraud, and responsible financial conduct.
For instance, Shari’ah prohibits fraud, unjust enrichment, and wrongful appropriation of wealth, while AML/CFT regulations require customer due diligence, transaction monitoring, and reporting of suspicious activities.
In practice, I advocate collaboration between Shari’ah compliance, regulatory compliance, risk management, and internal audit to ensure that institutional activities satisfy all applicable requirements.
Where differences arise, the institution must seek solutions that satisfy regulatory obligations without compromising Shari’ah principles.
My position is simple: a financial institution must be Shari’ah-compliant, legally compliant, and operationally responsible simultaneously.
5. Shari’ah Audit Methodology
What are the key steps in your Shari’ah audit process, and what evidence do you rely on?
My Shari’ah audit methodology follows a risk-based approach and generally involves five stages:
-
Planning: Understanding the institution’s products, operations, risks, and previous audit findings.
-
Risk assessment: Identifying areas with significant Shari’ah non-compliance exposure.
-
Testing: Reviewing transactions, contracts, approvals, disbursements, and operational procedures.
-
Reporting: Documenting findings, identifying root causes, assessing implications, and recommending corrective actions.
-
Follow-up: Ensuring management implements agreed recommendations.
The evidence I rely on includes financing agreements, supplier invoices, payment records, bank statements, accounting records, customer files, approval documents, and system-generated reports.
For example, in auditing Murabahah, I verify that the institution acquired the asset before selling it to the customer and that the transaction followed the approved Shari’ah structure.
Ultimately, every audit conclusion must be supported by sufficient and reliable evidence.
6. Islamic vs. Conventional Microfinance
What are the most significant differences, and what unique challenges does Islamic microfinance face in Nigeria?
The fundamental difference is the basis upon which financing returns are earned.
Conventional microfinance generally relies on interest-based lending, whereas Islamic microfinance uses permissible contractual arrangements such as Murabahah, Ijarah, Musharakah, and Mudarabah.
Islamic microfinance does not simply replace interest with another name. It requires genuine underlying transactions, appropriate risk allocation, transparency, and compliance with the rules governing each contract.
In Nigeria, some major challenges include limited public awareness, inadequate funding and liquidity options, shortage of skilled professionals, operational complexities, and misconceptions about Islamic financing.
Another challenge is the perception that Islamic financing must necessarily be cheaper than conventional financing.
I believe the sector can overcome these challenges through effective public education, stronger governance, innovative products, staff development, and strategic partnerships.
7. Product Review
How do you review a new product for Shari’ah compliance? Can you share an example of restructuring?
When reviewing a new product, I examine its underlying transaction, contractual structure, rights and obligations of the parties, operational procedures, pricing mechanism, and risk allocation.
I also ensure that the product is reviewed and approved by the appropriate Advisory Committee of Experts before implementation.
For example, consider a proposed financing arrangement where a customer receives ₦1 million and is required to repay ₦1.2 million. If this is simply a cash loan with a stipulated increment, it raises a Riba concern.
Rather than structuring it as an interest-bearing loan, we could consider Murabahah.
The institution purchases the asset required by the customer, acquires the necessary ownership or possession, and subsequently sells it to the customer at an agreed cost-plus-profit price, payable in instalments.
The key distinction is that the institution earns its return through a genuine sale rather than an increment on a cash loan.
This demonstrates that Shari’ah compliance requires attention to the substance and sequence of transactions, not merely the terminology used.
8. Shari’ah Risk Management
What are the biggest Shari’ah non-compliance risks in Nigeria, and how do you mitigate them?
Some major Shari’ah non-compliance risks include improper contract execution, incorrect transaction sequencing, inappropriate fees and charges, unauthorised product modifications, inadequate staff knowledge, and weak monitoring controls.
These risks can result in financial losses, reputational damage, regulatory concerns, and reduced public confidence.
My mitigation approach focuses on prevention, detection, and correction.
This includes proper product approval, clear operational policies, staff training, pre-disbursement reviews, periodic Shari’ah audits, and effective monitoring.
Where non-compliance occurs, I believe institutions must investigate the root cause, determine the appropriate Shari’ah treatment, implement corrective measures, and prevent recurrence.
Most importantly, Shari’ah compliance should be embedded in the institution’s organisational culture rather than treated as the responsibility of one department.
9. Capacity Building
How do you train staff on Shari’ah compliance, and what knowledge gaps do you observe?
I believe Shari’ah compliance training should be continuous, practical, and tailored to employees’ responsibilities.
My approach involves foundational training on Islamic commercial principles, product-specific training, practical case studies, and periodic compliance awareness sessions.
For example, relationship officers should understand customer eligibility and product suitability, while operations staff should understand contractual sequencing and documentation requirements.
Some common knowledge gaps include inadequate understanding of Fiqh al-Mu’amalat, confusion between Islamic financing and conventional interest-based lending, poor understanding of Shari’ah non-compliance risks, and limited awareness of regulatory requirements.
I also believe training effectiveness should be measured through practical assessments and reductions in recurring audit findings.
Ultimately, every employee should understand that Shari’ah compliance is a shared institutional responsibility.
10. Nigeria’s Islamic Finance Landscape
How do you assess the current state of Islamic finance in Nigeria — opportunities and obstacles?
I consider Nigeria’s Islamic finance sector a developing industry with significant opportunities, particularly given the country’s large population, substantial microenterprise sector, and growing need for financial inclusion.
There are opportunities in non-interest banking, microfinance, Sukuk, agriculture, infrastructure financing, and Islamic fintech.
Islamic microfinance, in particular, can support traders, farmers, artisans, and small businesses through Shari’ah-compliant financing structures.
However, challenges remain, including limited public awareness, inadequate funding opportunities, shortage of qualified professionals, liquidity management difficulties, and the need for stronger institutional capacity.
I believe the sector requires greater collaboration among regulators, financial institutions, Shari’ah scholars, professional bodies, and educational institutions.
Most importantly, growth must be accompanied by credible Shari’ah governance and operational integrity.
11. Islamic Fintech
How is fintech reshaping Islamic finance, and what role can it play in compliance and audit?
Fintech is creating opportunities for Islamic finance through digital banking, mobile financing, automated transaction processing, and improved access to financial services.
From a Shari’ah compliance perspective, technology can help automate compliance checks, monitor transactions, identify irregularities, and maintain reliable audit trails.
For example, a digital Murabahah platform can be designed to ensure that the institution completes the required asset acquisition process before executing the sale to the customer.
Artificial intelligence and data analytics can also assist auditors in identifying unusual transactions, reviewing documentation, and detecting potential compliance breaches.
However, technology must complement, not replace, qualified Shari’ah judgment. A digital transaction can still be non-compliant if its underlying structure is defective.
I believe the future of Islamic fintech lies in combining technological innovation with sound Shari’ah governance, cybersecurity, and regulatory compliance.
12. Advice for Aspiring Professionals
What advice would you give to someone aspiring to build a career in Shari’ah compliance and audit?
My advice is to develop a strong foundation in Islamic commercial jurisprudence while acquiring practical knowledge of banking, accounting, auditing, risk management, and regulatory compliance.
Islamic finance is multidisciplinary, so professionals must understand both the Shari’ah principles and the commercial realities of financial transactions.
I would encourage aspiring professionals to study AAOIFI standards, familiarise themselves with relevant CBN regulations, pursue professional certifications, attend industry programmes, and seek mentorship from experienced practitioners.
They should also develop strong analytical, communication, and report-writing skills.
Above all, integrity, independence, continuous learning, and professional courage are essential.
My message is simple: Do not see Shari’ah compliance merely as a job; see it as a responsibility to uphold trust, justice, transparency, and ethical conduct in financial transactions.
Wa salaamu alaykum, warahmatuLlahi wabarakatuh.