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Question:

Can I work in the Risk and Compliance department of a conventional bank? [Question published as received]

The Fatwa

In the Name of Allah, the Most Gracious, the Most Merciful

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.

The Fiqh of The Answer

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 Almighty Allah Alone Knows Best

Maulana Ammar Y Badat
Trainee Mufti

Reviewed and approved by
Mufti Faraz Adam
Darul Iftaa Muadh ibn Jabal
www.darulfiqh.com 

DISCLAIMER:

The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any institutions to which he may be affiliated.

Arguments and ideas propounded in this answer are based on the juristic interpretations and reasoning of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another Mufti may reach different conclusions to the one expressed by the author. Whilst every effort has been taken to ensure total accuracy and soundness from a Shari’ah perspective, the author is open to any correction or juristic guidance. On the event of any juristic shortcomings, the author will retract any or all of the conclusions expressed within this answer.  

The Shari’ah ruling given herein is based specifically on the scenario in question.  The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage.  This answer may not be used as evidence in any court of law without prior written consent from the author.  Consideration is only given and is restricted to the specific links provided, the author does not endorse nor approve of any other content the website may contain.

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