The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has phased in a new project for the development of a Shari’ah Standard on gold, including Shari’ah rulings for gold-based financial products, in cooperation with the World Gold Council and Amanie Advisors.
Earlier, AAOIFI’s Shari’ah Board approved the project and its theme and structure, and formed a subcommittee to conduct a thorough study and prepare a standard drawing, for technical aspects, on expertise of both the World Gold Council and Amanie Advisors.
The subcommittee has held its first meeting to discuss the detailed study and exposure draft of the Shari’ah Standard on Saturday 9 January 2016, and it plans to hold a series of meetings in upcoming months to complete its review of the exposure draft and then to submit it to the Shari’ah Board.
Dr. Hamed Hassan Merah, Secretary General, AAOIFI stated: “This standard is expected to have a substantial, positive impact as it will help address many issues and questions and will cover a wide spectrum of contemporary applications and crucial fiqh developments, not only in relation to the operations of financial institutions but also that of investors, and the public. This initiative involves a degree of close cooperation with the most prominent authority on gold, which will look into the topic from a technical point of view and will address various practical issues and challenges”.
Aram Shishmanian, CEO of the World Gold Council commented: “We are delighted that AAOIFI recognises the importance and value of creating a Shari’ah Standard for gold, and has agreed to take the leadership in developing this new Standard. The Islamic finance industry continues to grow in size and importance and there is a need for a greater understanding of the application of Shari’ah guidance on the use of gold. While there is currently limited guidance for gold coins and bars, there is virtually no guidance on gold elsewhere in the financial sector. We believe that this will bring important benefits to the industry, as well as improve consumer choice, enabling millions of Muslims to protect their wealth, and enhance financial stability, with gold”.
Datuk Dr Mohd Daud Bakr, Executive Chairman of Amanie Advisors said that this Standard will provide guidance from the Shari’ah perspective on the usage of gold in financial and investment transactions for Islamic financial institutions and participants. The Standard also aims to increase transparency and harmonisation regarding the use of gold in various market practices.
He added: We are pleased to have AAOIFI’s support for this initiative to standardize all aspects of Islamic financial transactions involving the use of gold and, in time, increase the adoption of gold in Islamic financial products. Deepening the role of gold gives Islamic investors better access to the unique qualities of this asset class, while broadening the overall Islamic finance asset base.