The regulatory challenge as presented in this book concerns not just the industry regulators and supervisors, and the international body they have set up, the IFSB, but the Islamic banks themselves and the governments and legislative authorities in the countries where they operate. The challenge to industry regulators and supervisors is no doubt the most obvious, in view of the characteristics of Islamic banks as both bankers and asset managers being subject to a requirement for Shari’ah compliance that is fundamental to their relationship with the major part of their clientele—characteristics which mean that they cannot be supervised in the same way as conventional banks. For example, in countries that do not have an integrated financial supervisor, Islamic banks may require supervision by an investment industry or securities market supervisor, as well as by a banking supervisor. The fact that Islamic finance is in a rapidly evolving stage of development, in terms of its products and techniques, adds to this challenge. For the Islamic banks themselves (or, more generally, the Islamic financial services industry sector), the challenge is to be proactive in adopting operational policies and practices that meet international standards of risk management, transparency, and corporate governance, going beyond “box-ticking” minimalist compliance, so as to facilitate the task of the industry supervisors. ...