Can I work in the Risk and Compliance department of a conventional bank?
The question, as received
Can I work in the Risk and Compliance department of a conventional bank? [Question published as received]
The answer
Strictly from a Fiqhi perspective, the income earned by a Risk & Compliance Officer can be deemed lawful if the role is not directly involved in any Riba-financing activities. Nonetheless, it is strongly encouraged to contribute and work in companies whose overall vision, mission and operations are in conformity with Sharia principles and are value-adding to the society and community.
Being an employee of an organisation which promotes, creates, and sells Riba means that one spends several years whilst in employment supporting the overall vision and mission of such organisations. Every employee plays a part and adds overall value to the institution. As a Muslim, we believe that interest-based financing is unfair, unjust and exploitation. It is not in anyone’s benefit. We believe that finance should be done in participatory methods where risks are shared, and rewards are shared, where there is a level-playing field between the financier and customer. Further, selling debts, charging interest, recycling loans in mortgage-backed securities and making money from simply lending are all harmful for the economy.
Condition: The role must not be directly involved in riba-financing activities.
Fiqh basis
The juristic concept of “Assisting in sin,” or ‘I’anah ‘Alal M’aṣiyah’ encompasses any post or role that supports and facilitates unlawful practices. ‘Allāmāh Badr Ad Dīn Al ‘Aynī (d.855 AH) and many other Fuqahā state that the who facilitate, assist in a sin or vice are also guilty of wrongdoing. However, there is a difference of opinion among the Imāms of Madhhab on what exactly constitutes assistance.
Ibn ‘Abīdīn (d.1252 AH) records the differing positions in his celebrated Hashiyah mentions that Imām Abū Ḥanīfah (d. 150 A.H.) has a differing view than that of his notable disciples, Imām Muḥammad (d. 189 A.H.) and Imām Abū Yūsuf (d. 181 A.H.). According to the principles of Imam Abū Ḥanīfah, a compliance role that does not directly facilitate, execute or encourage unlawful activity cannot be deemed unlawful. And as such, the earnings in lieu of such activity cannot be deemed unlawful. The reasoning is that there exists a F’il al-Fā’il al-Mukhtār (an independent decision makers doing) between the Risk & Compliance staff and the sin. In other words, there is an independent activity performed by a person by their own volition without any duress or orchestration of the compliance officer. As such, such roles cannot be held as sinful or illegal in Islamic law as it is not the proximate cause of the sin. The sin of Riba is created in the trading, selling and contracting of interest-based financing, not in the Risk & Compliance role.
To expound further in simple terms, Imam Abū Ḥanīfah’s principles mean that carrying out risk and compliance work is not inherently an unlawful activity; the officer is simply being paid for their service of risk management and regulation compliance similar to a farmer who tends to a vineyard or someone is involved in the construction of buildings that maybe used for unlawful or illegal activity later on. (Hāshiyah Ibn ‘Abidīn & Fatāwā Khāniyyah)
Therefore, a compliance officer cannot be held responsible for any unlawful trade or non-compliant agreement made by others. In other words, the officer’s role is not the proximate cause of the sin. Imam Abū Ḥanīfah’s principles suggest that carrying out risk and compliance work is not inherently unlawful, and compliance officers are simply being paid for their service of risk management and regulation compliance and thus the income and renumeration is legally valid. In financial institutions, operational roles may indirectly pave the pathway for parties intending something unlawful, but a compliance officer is not the proximate cause of Riba as the process involves many more integral components.
On the other hand, based on the principles of ‘assistance’ reasoned by Imam Muhammad (Rahimahullah) and Imam Abu Yusuf (Rahimahullah), any activity that can lead to sin and is part of the value chain of unlawful activity is considered in proximity to the sin and not permissible.
And Allah knows best.
Maulana Ammar Y Badat
Reviewed and approved by Mufti Faraz Adam
Based on the Hanafi school and on the question as it was asked. Another mufti may reach a different conclusion. Read the disclaimer.