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Guiding Voices of the Islamic Finance

The Guiding Voices of the Islamic Finance Industry


The Islamic finance (IF) industry is often accused of being a carbon copy of conventional finance. The general perception held amongst Muslims and non-Muslims alike is that the difference between its products and instruments and those of conventional finance simply lies in its uncanny use of legal twists and tweaks (hilah Shariyah) to assert “Shariah compliance” despite the outcomes being similar – if not identical – to conventional financial transactions.

The issue is further exacerbated by the fact that financial dealings are categorized under matters of fiqh (i.e. Islamic jurisprudence) which, unlike Ibadat (or devotional practices), are generally held to be open to interpretation and new ideas so long as they uphold the relevant overarching principles.

Status quo and challenges

Based on this principle, contemporary scholars have built upon the legacy of the predecessors, exerting major efforts to introduce innovative IF ideas and practices. Despite these noble efforts, however, it is an undeniable fact that the IF industry, as we know it today, plays a secondary role in the world of finance. This is manifested by its minute global market share that is less than two percent. Dominated by international conventional finance, it has had to maneuver within the established guidelines and standards that are, at times, in contravention – or at least highly not supportive – of the principles and objectives of the Shariah.

Despite Muslims making up nearly one fourth of the world’s population, a lack of consistency in Shariah rulings is recognized as one of the core reasons for the IF industry’s progress being hampered. The lack of a widely recognized and well respected Shariah rulebook within it has often left investors uncertain of the presiding Shariah law and, accordingly, unable to predict the legal outcome of their cases if or whenever the need arises.

Project B2: Beyond Borders

Accordingly, in an attempt to ameliorate the industry’s image and grow its footprint in global finance, the industry’s thought-leading stakeholders have come together to carry out beyond-border initiatives i.e. to establish reputable international institutions that promote consistency in Shariah rulings. This was the thought process that gave birth to institutions like the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) (established in 1990), International Islamic Financial Market (IIFM) (established in 2002), the Muslim World League’s Islamic Fiqh Council (MWL, IFC) (established in 1977) and OIC’s International Islamic Fiqh Academy (IIFA) (established in 1981).

While the former two organizations establish Shariah compliance standards and guidelines for financial transactions, the latter two put forth Shariah resolutions endorsing or renouncing contemporary and highly-debated jurisprudential-related propositions, particularly in the field of IF.

AAOIFI and IIFA as Guiding Voices of the IF Industry

As it stands today, AAOIFI stands as one of the most – if not the most – widely adopted Shariah governance, accounting and auditing guide for academic and industrial sectors institutions participating in the IF industry. In fact, a long list of states has adopted AAOIFI’s standards and codes within their jurisdiction as mandatory regulation. This includes countries such as Afghanistan, Bahrain, Oman, Qatar, Jordan and Nigeria.


To answer the question of what makes AAOIFI’s resolutions so special, one may simply look at its Shariah board. Currently sitting as its chairman is none other than the honorable Justice Mufti Muhammad Taqi Usmani who is the former Central Shariah Court of Pakistan and Shariah Appellate Bench of the Supreme Court of Pakistan. On an international level, he sits as a Shariah supervisory board member of numerous financial institutions and is a permanent member of the renowned IIF.

He’s most notably known for his disruptive Shariah pronouncement in 2008 when he declared 85% of sukuk issuances to be Shariah non-compliant! These and other of his notable works have put him in the ranks of most influential Muslims of the present time and earned him numerous national and international accolades recognizing his great contributions to the Ummah.

Another prominent figure that sat on AAOIFI’s Shairah board (as Deputy Chairman) is Sheikh Dr. Abdul Sattar Abu Ghudda who acquired his PhD from al-Azhar University. Before his passing in 2020, he served as an active member of the OIC’s IIFA and the Kuwaiti Government’s Fatwa Committee, where he heavily contributed to the creation of Kuwait’s Fiqh Encyclopedia. Similar to Mufti Taqi Usmani, he sat on the Shariah Advisory Board of various international financial institutions, such as Dallah Albaraka Group, BNP Paribas, and S&P Dow Jones.

As if the above figures were not enough to satisfy the reader of the level of scholarity within AAOIFI’s leadership, one final personality that may seal the deal on the matter is the man who has been holding the title of Grand Mufti of Dubai since 2011, Prof. Dr. Ahmed Abdulaziz Al-Haddad. In addition to this status, he also serves as Chairman of the Higher Sharia Authority of the Central Bank of the UAE and heads the fatwa department at the Dubai Fatwa Center. He sits as a member of the OIC’s IIFA, the Authority of Senior Scholars of Dubai and the Fatwa Board of the Emirate of Abu Dhabi.

AAOIFI membership: experts and specialists

In addition to these globally renowned Shariah figures, AAOIFI has ensured that its membership encompasses specialists from the world of finance and economics. An example of this would be Mr. Irshad Mahmood, who is a partner and lead auditor of Deloitte in the Middle East. His 25 years of experience that ranges across the (Islamic and conventional) sectors of real estate, banking, capital market and insurance, among others, serving government institutions and multinational corporations as a consultant/technical adviser and/or board and committee member.

Among others, the list of AAOIFI membership also includes heads of central banks, such as Mr. Saud Al Busaidi (Manager, Central Bank of Oman) and Ms. Amal Al Masri (Head of Supervision Department of Islamic Banks, Central Bank of Syria). Additionally, there are experts from the field of accounting, such as Mr. Syed Najmul Hussain, Mr. Samet Arslan and Mr. Hondamir Nusratkhujaev, all of whom occupy senior positions within their reputable organizations.

AAOIFI: key features and procedure of issuance and revision

Another distinguishing feature of AAOIFI’s Shariah Standards is in relation to the stages or processes of issuing or revising its Shariah Standards. When newly introduced, consultants are called upon to develop an exposure draft that is thereafter taken to a designated Shariah Committee (formed by the Shariah Board), followed by the earlier-mentioned Shariah Board. At this stage, a public hearing is set; during which, industry experts and other relevant stakeholders provide their valuable remarks. These remarks are reviewed by the Shairah Board before finally being sent off to a drafting committee that carries out the final edits to the text before its publication.

Commendably, heads of AAOIFI made it a point for all the major schools of Islamic jurisprudence to be represented within the Shariah board just as they insisted on the active involvement of experts from all the relevant fields of specialization. By virtue of this, Shariah scholars from all over the world deliberate on the exposure drafts (at the issuance stage) and established standards (at the revision stage), which allows for maximum exposure (of Shariah views) and accounts for differences in reality within localities.

Why OIC International Islamic Fiqh Academy (IIFA)?

Aside from AAOIFI, the OIC’s International Islamic Fiqh Academy (IIFA) (commonly referred to as the Majma) is another highly regarded international Islamic organization. Unlike AAOIFI, its scope spans beyond financial matters to encompass all aspects of fiqh or Islamic jurisprudence. From issuing resolutions condemning acts of terror to establishing the ruling on the use of certain food or pharmaceutical products, IIFA has issued more than 238 resolutions. Its primary aim is to offer guidance to Muslims on matters concerning the public.

The relation between AAOIFI and IIFA is one that sees the latter lay down the Shariah bases for AAOIFI’s Shariah Standards. Often times, AAOIFI cites IIFA’s resolutions as a reference for its deduction of Shariah rulings and the methodologies adopted to arrive at them.

The organization’s current president and Secretary-General, Sheikh Salih bin Abdullah al Humaid and Prof. Dato Dr. Koutoub Moustapha Sano, respectively, preside over a pack of esteemed scholars that are either representing one of the 57 members states of the OIC or appointed by the Academy. The member list includes notable scholarly figures, such as Egypt’s former Grand Mufti Professor Doctor Ali Gomaa Mohamed Abdelwahab and a number that are part of AAOIFI’s board of Shariah scholars, such as Mufti Muhammad Taqi Usmani (of Pakistan), Sheikh Dr Kahlan Al Kharusi and Ahmad Abdulaziz Qassim Alhaddad (of the U.A.E.).

IIFA: key features and procedure of issuance and revision

Similar to AAOIFI, the process of issuing a resolution in the IIFA is one that is lengthy. On the base level, the IIFA sends out invitations to its designated Shariah members (state representatives and appointed members) to write academic papers on the subject matter in question.

A particular subject matter is tabled by the IIFA’s Secretary-General before the designated Shariah members (state representatives and appointed members). Prior to any Shariah deliberations, a special conference is convened, where experts of the relevant fields of specialization (i.e. social and applied sciences) are invited from different corners of the world to present their findings on the subject matter in question. Upon completion, the Shariah scholars would deliberate the matter and either produce a resolution on the matter or adjourn it where there is a need to hold more sessions for further deliberations. To ensure maximum benefit, the IIFA’s resolutions are translated from Arabic into languages widely spoken within the Muslim world, namely, English and French.


In conclusion, it has been shown that the Shariah pronouncements of AAOIFI and IIFA are established through lengthy deliberations by and the collective effort of the most prominent of experts and specialists of Shariah and other fields of science relevant to the subject matter in question.

It is, accordingly, important to understand that the standards issued by AAOIFI and the resolutions of the IIFA constitute a concrete Shariah basis that can be relied on by Muslims and non-Muslims all across the world. The pool and caliber of scholarity through which the relevant standards and resolutions are issued solidify the said bodies’ position as the most competent institutions to bring the IF industry closer to realizing its underlying spirit and achieving the intended objectives of the Shariah.


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