The Shari’ah Standard on Gold
The AAOIFI Shari’ah Standard on Gold developed in collaboration with the World Gold Council offers definitive guidance on the use of gold in Islamic finance.
The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) is recognised as the world leader in Islamic finance standards, and its rulings are widely accepted across many Islamic markets.
AAOIFI’s Shari’ah Standard on Gold, launched in 2016, has acted as a catalyst for the development of new Shari’ah- compliant gold products including gold investment accounts, physical gold ETFs, spot contracts and regular gold savings plans. Some of the world’s top Shari’ah scholars were involved in its development, including Sheikh Yusuf DeLorenzo and YBhg Tan Sri Dr Mohd. Daud Bakar.
"AAOIFI’s Shari’ah expertise and the World Gold Council’s industry know-how have ensured that the Standard becomes the basis not only for the inclusion of a historically and economically important asset class, but for the stability of Islamic Financial Institutions around the world."
Sheikh Yusuf DeLorenzo
International Shari’ah Scholar
Five Most Important Principles of the Standard
The Standard sets out the conditions that must be met when investing or transacting in gold, ensuring that the world’s 1.6bn Muslims can benefit from Shari’ah-compliant gold products.
The Standard sets out several principles, the five most important being:
1. Gold must be traded on a spot (hand-to-hand) basis;
2. Gold can be owned on a physical or constructive basis;
3. In the case of constructive possession, the gold has to be fully allocated;
4. Allocation can occur through either a T+0 settlement, or the receipt of a certificate/ confirmation specifying bar ownership;
5. Joint ownership is permissible, where each partner owns an undivided beneficial interest in a Trust.
The Standard is available for download in English, Arabic, and Turkish:
Development and consultation process for the Shari’ah standard on gold
Islamic finance is a $2tn market, and in 2014 the World Gold Council partnered with Amanie Advisors to explore the role of gold in Islamic finance. Following a consultation process AAOIFI formed a working group which led to the launch of the Standard in 2016.
Key Facts
- Over 1,000 Islamic finance institutions and experts involved in the consultation process.
- Standard endorsed by AAOIFI’s Shari’ah board comprising 20 leading scholars from Saudi - Arabia, Pakistan, Egypt, Oman, Kuwait, Bahrain, Jordan, Libya, Syria, Morocco, Malayysia, Sudan and Mauritiana
- Consultation events held in conjunction with the DMCC, ISRA, Participation Banks Association of Turkey, Bank Negara Malaysia, Central Bank of Sudan, and the Central Bank of Oman.
- Launched at a series of events held in conjunction with the World Islamic Banking Conference in Bahrain, the Dubai Multi Commodities Centre, Bank Indonesia, and the Central Bank of the Republic of Turkey.
- AAOIFI Standards are used worldwide and automatically or voluntarily adopted in many jurisdictions. In 2018, the UAE was the latest country to make AAOIFI Standards mandatory
