AI use in Shariah audit analytics significantly enhances effectiveness, accuracy of compliance processes

The use of Artificial Intelligence in Shariah audit analytics can significantly enhance the efficiency, effectiveness, and accuracy of compliance processes within Islamic finance institutions, 10th Doha Islamic Finance Conference said in a communiqué.
This, it said, can be done through automated data analysis techniques, predictive analytics for risk assessment, enhanced reporting and documentation, and real-time monitoring to promote trust, transparency, and integrity in Islamic finance industry.
The conference noted that robots and electronic trading agents may be regarded as legally competent and financially liable by drawing parallels with the financial responsibility of non-human entities, such as groups of individuals, funds, endowments, and bait al-maal (the treasury).
Exploring Shariah rulings based on the provisions applicable to the al-‘abd al ma-doon (authorised slave) in Islamic jurisprudence can provide further insight into their legal status and responsibilities.
Chat-GPT and similar artificial intelligence applications cannot be independently relied on in issuing authoritative fatwas, particularly in matters that require interpretation skills of religious texts, contextual analysis, and consideration of specific circumstances.
Nonetheless, artificial intelligence techniques can be utilised as auxiliary tools in issuing religious ruling, gathering scholarly sources and fast-checking information.
“We encourage endowment institutions to embrace advancements of artificial intelligence and incorporate them into their operations for documentation, preservation, and safeguarding endowment assets. Moreover, endowment institutions can leverage on artificial intelligence in endowments management and investment decision making.
“The integration of artificial intelligence in endowments operations aims to enhance the effectiveness, governance, and overall management of endowments,” the conference noted.
The utilisation of Natural Language Processing (NLP) technology has the potential to advance the creation of Islamic financial products, improve customer services, and deepen the comprehension of Islamic financial products and decision-making among consumers and investors.
“We advocate for enhancing collaboration and forming partnerships between Islamic financial institutions and technology firms specialising in Islamic financial product development. This collaboration aims to foster innovation, facilitate knowledge exchange, and devise inventive solutions tailored to market demands.”
In light of the urgent need for data sharing, legislation should impose stringent regulations aimed at regulating and safeguarding privacy. Regulatory agencies should fortify the pertinent provisions while organisations operating within this domain endeavour to elevate their expertise and promote ethical awareness regarding data handling and sharing in a way that ensures the protection of the rights of individuals, society, and public order.
The communiqué noted it is important to explore the intersection of technology, finance, and ethics, by integrating cutting-edge advancements of artificial intelligence in the ethical framework of Islamic finance, to enhance ethical integrity and transparency, thereby contributing to attracting customers to the Islamic finance industry and the growth and sustainability of Islamic finance institutions in light of the objectives of Sharia.
By harnessing the power of generative AI technologies such as machine learning and deep learning, the communiqué said Islamic banks can drive an unprecedented transformation in several areas including decision-making, risk management, fraud detection, customer segmentation and personalisation, algorithm trading, and empower the workforce with modern technological developments, while upholding to the ethical principles of Islamic finance.