The United Arab Emirates Ministry of Finance, the Islamic Development Bank and the Dubai Islamic Economy Development Centre are partnering to develop a unified global legal and legislative framework for the Islamic finance sector.
DIEDC has signed a memorandum of understanding with industry infrastructure body the Accounting and Auditing Organization for Islamic Financial Institutions to enable it to use AAOIFI's standards as a reference in building the international legal framework with the guidance of the UAE Ministry of Finance and IDB, according to a statement on the government of Dubai media office website on Wednesday (May 6).
“After conducting multiple studies in collaboration with major consultancies, we have concluded that the differences in the legislations and laws governing business practices in Islamic finance continue to slow down the growth of the Islamic economy sector, while expending more time, effort and cost,” said UAE minister of economy and chair of DIEDC Sultan bin Saeed Al Mansouri.
He said there is now “an urgent need” to accelerate growth and “reduce discrepancies in practices” across the globe.
“Enabling and standardising legislations provides the guarantees and trust needed to build smoother and stronger business relations. New courts are expected to be established worldwide to settle Islamic financial disputes according to the new unified legislative framework,” said the minister.
Islamic Development Bank president Dr. Bandar Hajjar said the initiative comes in response to the growing demand from Islamic financial institutions and dispute settlement centres, including courts and arbitration centres.
The Jeddah-based multilateral whose members are 57 countries of the Organisation of Islamic Cooperation (OIC) will offer technical assistance on the project.
“We will support DIEDC in achieving the project’s objectives and present it to member countries so that they can adopt it and make it an integral part of their own legislations with regard to Islamic financial transactions,” said the IsDB president.
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