The Dubai Financial Services Authority (DFSA), the independent regulator for the Dubai International Financial Centre (DIFC), has initiated a public consultation on significant enhancements to its Islamic finance regulatory framework. The proposed changes aim to bring greater clarity and stronger disclosure standards to the sector, aligning with the UAE’s broader economic goals, including the Dubai Economic Agenda (D33).
Quick Facts
- Public consultation launched on Islamic finance rules.
- Focus on endorsement clarity and Takaful disclosures.
- Aims to bolster UAE’s global finance hub status.
Strengthening Dubai’s Islamic Finance Hub
The move comes as the UAE continues to cement its position as a major player in the global Islamic finance market. According to the 2024 Islamic Finance Development Indicator (IFDI), the country ranks fourth globally by assets and third in financial performance. The DIFC itself is one of the world’s largest venues for Sukuk listings, with over $100 billion in outstanding value.
Charlotte Robins, Managing Director of Policy and Legal at the DFSA, noted the strategic importance of the update. “As the Islamic finance sector continues its strong growth within DIFC, the UAE and globally, we aim to ensure our regulatory framework provides the clarity and certainty firms need to operate confidently within appropriate boundaries.”
“These proposals reflect our ongoing engagement with the industry and our commitment to supporting the development of this strategically important sector,” she added.
Clarifying Rules for Shari’a-Compliant Operations
The core of the proposal, detailed in Consultation Paper No. 172 (CP 172), focuses on when firms require a specific “Islamic endorsement” to conduct business.
Under the new guidance, any firm presenting its operations or products as Shari’a-compliant, including fund managers with Islamic-labelled funds, would need the endorsement. However, firms that only distribute Islamic products without explicitly branding themselves as Shari’a-compliant would not need the endorsement, as long as they adhere to existing client protection rules.
Boosting Consumer Protection in Takaful Products
To improve consumer protection, the DFSA is also proposing mandatory disclosures for all Takaful products, which are Shari’a-compliant mutual insurance systems.
These disclosures would require firms to clearly communicate key contract features, fee structures, surplus-sharing arrangements between participants and operators, and any potential for additional contributions from policyholders.
The DFSA has invited feedback from authorized firms and industry stakeholders until June 19, 2026, after which it will finalize the amendments to its Rulebook.
About The Dubai Financial Services Authority (DFSA)
The Dubai Financial Services Authority (DFSA) is the independent regulator of financial services conducted in or from the Dubai International Financial Centre (DIFC). The DFSA operates as a Shari’a systems regulator, requiring authorized persons to establish systems and controls to manage Islamic financial business and its associated risks, without determining the Shari’a compliance of specific products.
Source: Zawya
