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A UAE Islamic financial product is measured against the output of the Higher Shariah Authority: its resolutions, fatwas, regulations and standards.
A UAE Islamic financial product is measured against the output of the Higher Shariah Authority: its resolutions, fatwas, regulations and standards. This is not a statement of principle. It is the statutory test. The Central Bank law deems an Islamic Financial Institution compliant with Shariah if it complies with the resolutions, regulations and standards issued by the Authority (Federal Decree-Law No. 6 of 2025, Article 74(4)), and it measures a contravention against those same rulings, resolutions and standards (Article 77). The statute does not itself set out the Shariah rules a product must satisfy. It creates the Authority that sets them and makes that Authority’s output the operative test.
Beneath the statute the detail sits in two places, which bind differently and must be kept apart. The first is the Central Bank’s own Shariah Governance Standard, a regulatory instrument that binds of its own force. The second is an external body’s Shariah standards, which bind a UAE institution not because that body issued them but because the Authority has adopted them, and only so far as it has. The Authority has adopted the standards of the Accounting and Auditing Organisation for Islamic Financial Institutions as the minimum. This piece sets out both layers and where the current version of each is found.
One currency point belongs in the short answer. The Central Bank’s operative Shariah-governance standard was issued under the 2018 Central Bank law that Federal Decree-Law No. 6 of 2025 repealed, and it remains in force only because the new law preserves prior regulations until they are replaced (Article 183). It is current, but it is a legacy-law instrument, and Section VIII returns to what that means for reliance.
Three provisions of the decree-law set the test, and they point the same way. The Authority is empowered to establish the Shariah rules, controls, standards and general principles for Shariah-compliant business, and the Shariah governance requirements that apply to it (Article 24(5)). An institution is then deemed compliant with Shariah if it complies with the resolutions, regulations and standards the Authority issues (Article 74(4)). And a contravention is established where an institution conducts business that contravenes Shariah as per the Authority’s rulings, resolutions and standards (Article 77). Read together, the empowering provision, the deeming provision and the contravention provision make one thing operative: not Shariah in the abstract, but the Authority’s output as the measure of it.
The consequence for a structuring question is precise. When the question is whether a product is Shariah-compliant for UAE regulatory purposes, the answer is not settled by a scholar’s view in the abstract or by market consensus elsewhere. It is settled by whether the product conforms to what the Authority has issued. The next two sections identify what that output currently consists of.
The Central Bank’s Standard on Shariah Governance for Islamic Financial Institutions is the instrument that operationalises the statutory test (Standard Re. Shariah Governance for Islamic Financial Institutions, STA-LFI-GOV-2020, In-Force). Its objective is stated as setting the minimum requirements for an institution’s compliance with Shariah in all its objectives, activities, operations and code of conduct (Article 2.1). It is a floor the Authority can build on, not a ceiling: the Standard states that where it lists a requirement as a minimum, the Central Bank may impose additional requirements (Article 1.4).
The Standard defines the thing the whole framework turns on. Compliance with Islamic Shariah means compliance with, first, the resolutions, fatwas, regulations and standards issued by the Authority, and second, the resolutions and fatwas of the institution’s own Internal Shariah Supervision Committee, provided they do not contradict the Authority’s (Article 4.5). That two-tier definition is the same hierarchy the decree-law sets at Articles 24 and 75, now expressed as the operating test a product is assessed against: the Authority’s output governs, and the committee’s output governs beneath it so long as it stays consistent.
The currency of this instrument is itself part of the reading. The Standard records that it was issued under the powers of the 2018 Central Bank law (Article 1.3), the law that Federal Decree-Law No. 6 of 2025 repealed. It has not been reissued under the new law. It continues to bind only through the preservation provision that keeps prior regulations, standards and circulars in force until the Central Bank replaces them (Article 183). So the operative Shariah-governance standard is a live instrument resting on a repealed statute, which is exactly the position the reader must verify before relying on any detail in it: current version, not superseded.
The external layer is the Shariah Standards of the Accounting and Auditing Organisation for Islamic Financial Institutions. They bind a UAE institution because the Authority adopted them, and the adoption is on the record in the Central Bank’s own mandatory instruments. The Guidance Note governing the annual Shariah report requires each committee to record that, in accordance with the Authority’s Resolution No. 18/3/2018 and with effect from 1 September 2018, it has abided by the AAOIFI Shariah standards as minimum Shariah requirements, in all fatwas, approvals, endorsements and recommendations, without exception (Guidance Note Re Annual Shariah Report of the Internal Shariah Supervision Committee, N 5330/2020, In-Force, Annual Shariah Report template, Shariah Standards section).
Two features of that adoption decide how a structurer should treat AAOIFI. First, AAOIFI standards are binding here by adoption, not by their own authority: the operative instrument is the Authority’s resolution, and AAOIFI is the content it adopts. Second, they are adopted as the minimum, and without exception, which means they set a floor that every fatwa, approval and endorsement must clear, while leaving the Authority free to impose stricter or UAE-specific requirements above that floor through its own resolutions. A product that satisfies AAOIFI has cleared the floor; whether it satisfies the whole of the Authority’s output is the further question the deeming rule at Article 74(4) actually asks.
One qualification is marked rather than glossed. This article has read the adoption as it is quoted in the Central Bank’s Guidance Note, which states its effect and its date. The full scope of Resolution No. 18/3/2018, including any carve-outs or version-specific limits on which AAOIFI standards are adopted, turns on the text of that resolution, which is not reproduced here; its own terms govern, and a matter that depends on the precise reach of the adoption requires the resolution itself. A parallel adoption of the prudential standards of the Islamic Financial Services Board is reported on the Central Bank’s materials and is noted here as a separate strand, not read for this article.
The Standard assures compliance with the test through a three-lines-of-defence structure the institution must build (Article 6.1): the business line as the first line, an internal Shariah control division as the second, and an internal Shariah audit division as the third, the second and third kept organisationally separate from the business they oversee (Articles 9 to 11). Above them sits the committee, which issues the fatwas and resolutions that bind the institution and remains accountable for their consistency with the Authority’s resolutions and standards (Article 8.1).
The reporting line runs to the Authority, not merely to the board. The committee must issue an annual Shariah report on the institution’s compliance, and that report must be submitted to the Authority for review and approval before it is put to the general assembly (Standard, Article 6.6; Guidance Note, Articles 4.3 and 4.4, the latter setting a two-month deadline from financial year-end). Compliance with the standard is therefore not a matter the institution certifies to itself; it is audited internally, reported annually, and signed off by the Authority above.
Failure carries two distinct consequences, and a structurer should price both. The first is supervisory: a contravention of Shariah, measured against the Authority’s output, exposes the institution to the actions and sanctions the Central Bank determines after consulting the Authority (Federal Decree-Law No. 6 of 2025, Article 77), which is the Central Bank’s ordinary supervisory response reached through the Authority rather than a separate Shariah forum.
The second is economic, and it is specific to this framework. Where a non-compliance is identified, the committee must approve correction where feasible, Shariah remediation of the consequences where correction is not feasible, and preventive measures against recurrence (Standard, Article 8.3). The remediation includes purification: the Central Bank’s annual-report template records that revenue derived from transactions in which non-compliance was identified is set aside and disposed of to charitable purposes (Guidance Note, Annual Shariah Report template, duties of the committee). The income earned on a non-compliant basis is given away. That is a loss a supervisory fine does not capture, and it is the reason the reversibility analysis in an Islamic product plants its flag at product approval and at the constitutional documents: once the product is issued and earning, the exposure is not only a possible sanction but the purification of what it earns.
The organising discipline of this piece is the distinction between the two layers, and it is worth stating flatly. The regulatory instrument, the decree-law and the Central Bank’s Shariah-governance standards, binds of its own force. The external Shariah standard, AAOIFI, binds only through the Authority’s act of adoption and only to the extent of that act. Collapsing the two, treating AAOIFI as binding in itself or treating an unadopted standard as governing, misstates the source of the obligation even where it reaches the right result.
Two comparisons would illuminate this framework, and both are held back for want of a source read for this article. Malaysia operates a statutory apex Shariah body whose rulings bind Islamic financial institutions, a structure close enough to the UAE’s to be instructive on where the two diverge; that comparison is not made here because no Malaysian primary source has been read for this piece, and it is flagged for a dedicated treatment. The Dubai International Financial Centre and Abu Dhabi Global Market operate their own Islamic-finance regimes under the Dubai Financial Services Authority and the Financial Services Regulatory Authority respectively, outside the Central Bank’s perimeter (the decree-law does not apply in the financial free zones); their modules are likewise reserved for a comparison made against those modules once loaded. The AAOIFI standards’ own text has not been reproduced here either: this article establishes that they are adopted as the minimum, not the content of any particular standard.
What is settled sits on the face of the instruments. The statutory test is settled: compliance is compliance with the Authority’s output (Article 74(4); Article 77). The operative standard is settled and identified (the Shariah Governance Standard, In-Force). The adoption of AAOIFI as the minimum, without exception, from 1 September 2018 is recorded in the Central Bank’s own mandatory Guidance Note (Resolution No. 18/3/2018). And the assurance machinery, the three lines of defence and the Authority-approved annual report, is settled in the Standard.
What is open is bounded and named. The precise scope of the AAOIFI adoption resolution turns on the text of Resolution No. 18/3/2018, which this article has read only as quoted in the Guidance Note; a question that depends on which AAOIFI standards are adopted, or on any carve-out, requires the resolution itself. The extent of any Islamic Financial Services Board adoption is a separate open strand. And the comparators in Section VII are open pending their sources.
What is moving is the instrument layer, and the direction is clear. The Central Bank’s Shariah-governance standards were made under the repealed 2018 law and survive only under the preservation provision until they are replaced (Article 183), while the reconciliation period for the new law runs for one year from 16 September 2025, extendable (Article 184). That the Central Bank has continued to build this stack, adding a dedicated Shariah Compliance Function standard in recent years, shows the layer is active rather than static. The single largest refresh trigger for this piece is the reissuance of the Shariah Governance Standard under Federal Decree-Law No. 6 of 2025: on the day that happens, the operative instrument in Section III changes, and every reliance on the current Standard must be re-verified against the replacement. Until then, the rule the field itself teaches applies: confirm the version at the point of reliance, because the operative standard is a legacy-law instrument living on borrowed time.
This analysis rests on Federal Decree-Law No. 6 of 2025, on the Standard Re. Shariah Governance for Islamic Financial Institutions (STA-LFI-GOV-2020), and on the Guidance Note Re Annual Shariah Report of the Internal Shariah Supervision Committee (N 5330/2020), each as it stands on the Central Bank’s live rulebook and each in force on the date of this article. Where the position turns on the Authority’s Resolution No. 18/3/2018, on any Islamic Financial Services Board adoption, or on a free-zone or foreign regime, those instruments govern and are read in the pieces that follow.
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