This blog was co-authored by Kristin January, Trainee Associate

Islamic finance has shown to be systemically important in many jurisdictions and is growing in the wider regions of the Middle East, Asia and Africa. Recent discussions focusing around the favourable prospects of green Sukuk are another growth driver for Islamic Finance.

COP-27 highlighted the massive

Attempting to define Islamic financing is not always easy. Put simply, Islamic finance is a way of doing financial transactions and banking while respecting Islamic Law (Shari’ah).  The underpinning principles of Shari’ah are based on social vision of public interest, equity, justice and fairness. Shari’ah gives guidance as to what is, and what is not

The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is an independent Islamic international non-profit body that prepares accounting, auditing, governance, ethics and Shariah standards for Islamic financial institutions and the industry. AAOIFI is respected in the industry and their governance standards are used by many firms globally.

The AAOIFI central Shariah board has

Islamic finance has an array of structures to deal with various commercial needs, but adhering to Islamic law (Shariah) principles. One commonly used structure is Musharakah.

What is Musharakah?

Musharakah is similar to a joint venture. It allows equity participation by the parties, who finance a project in agreed proportions in either cash

Islamic finance transactions are based on Shariah (Islamic law).

For an Islamic finance structure to be Shariah compliant it cannot contain elements of riba (interest), gharar (uncertainty), maisir (gambling) or investment in prohibited industries such as alcohol, pork products, conventional finance and pornography.


Shariah deems money to have no intrinsic value – it is