UAE solidifies its position as a leading global hub for Islamic finance

The UAE is solidifying its position as a leading global hub for Islamic finance and the Halal industry through an integrated strategic ecosystem comprising legal, Shari'ah, and regulatory frameworks, as well as governance systems led by the Central Bank of the UAE (CBUAE).

This approach enhances legal and Shari'ah certainty within Islamic banking and finance, supports the sector's growth within a legislative framework, and bolsters its competitiveness and sustainable growth.

The UAE Cabinet’s approved in May 2025 "The UAE Islamic Finance and Halal Industry Strategy 2025 - 2031", aimed at diversifying the economy by capturing global growth opportunities in these sectors. The CBUAE plays a pivotal role in coordinating efforts with federal and local entities in order to integrate Islamic Finance and Halal Industry within the UAE's economic agenda.

The strategy seeks to increase local Islamic finance assets to Dhs 2.56 trillion by 2031 under a vision to make the UAE a global hub for Islamic finance and Halal industry at the forefront in impact and advanced innovation.

It also aims to capturing opportunities in the global Islamic markets through establishing a robust ecosystem that facilitates global Islamic financial transactions, investments, and trade of halal products; produces high-value halal industry products; and enhances social and environmental impacts for sustainable development.

The strategy’s strategic objectives seek to enhance the competitiveness of the Islamic finance industry and elevate into global scales, strengthen local production and re-export of Halal industry products and expand the role of Islamic philanthropy in supporting highly effective sustainable development.

The strategic initiatives include: Developing large-scale and competitive Islamic financial institutions and promote internationalization, catalysing the integration between Islamic finance and the Halal industry, fostering the global ecosystem for sukuk market, money market, and Islamic funds in the UAE, nurturing an environment to drive innovation in the Islamic finance industry, creating a mechanism for impactful Islamic sustainable finance through international collaboration.

Initiatives within the Halal industry seek to creating a supportive ecosystem to scale up local production of high-value halal products, establishing a halal traceability system to boost re-export of halal products, fostering an enabling environment for scaling up local SMEs and technology startups in the halal industry and developing a foundation for strengthening halal tourism, modest fashion, and Islamic-themed media.

In regards to Islamic philanthropy, the strategy seeks to catalyse the adoption of a waqf mechanism in philanthropic activities across public private sectors and establish solutions that enable transparent monitoring when impacts of Islamic philanthropy.

The UAE has reinforced its position as a leading global hub in Islamic finance through a comprehensive ecosystem of legal, Shari'ah, regulatory frameworks and governance systems led by the Central Bank of the UAE.

The Central Bank of the UAE initiated efforts to enhance legal and Shari'ah certainty for Islamic banking and finance by enhancing trust in Islamic finance services, establishing an advanced legislative and legal environment to support innovation, protecting customers' rights, and supporting an advanced financial system that meets the requirements of all segments of society.

For enhancing legal certainty, Commercial Transactions Law (Federal Decree by Law No. 50 of 2022) became the first commercial law that regulates Islamic finance contracts and provides a clear and specific legal reference for Shari'ah compliant transactions.

The law allocates a full chapter for Islamic finance that includes the forms and provisions of contracts and financings, links the provisions of the law to the Shari'ah standards issued by the Higher Shari'ah Authority, providing a clear method to interpretation and resolving disputes and empowers the Central Bank to issue regulations after the approval by the Higher Shari'ah Authority.

The Central Bank Law (Federal Decree-Law No. 6 of 2025) regulates the Islamic finance institutions' business activity and their supervisory and Shari'ah frameworks. Key highlights are: excluding Islamic financial institutions from the prohibition of trading in real estate and goods on the bank's account, to the extent required to implement financing forms in line with Islamic Shari'ah and exempting Islamic financial transactions from registration requirements or similar fees or costs.

For reinforcing Sharia'h certainty, the CBUAE established the Higher Shari'ah Authority in 2018 to standardise the Shari'ah aspects for Islamic financial institutions and unify their practices, in line with internationally recognized Shari'ah standards.

To this end, the following was issued: More than 280 standards and resolutions regulating Islamic financial transactions and minimising differences in Shari'ah views, and more than 9 Shari'ah governance standards, setting rules to ensure compliance with Shari'ah standards and prudential standards that enhance financial integrity, risk management and stability of Islamic financial institutions.

Impacts and results of the strategy include: clear rights and obligations, and ability to implement contracts compatible with Shari'ah, standard Shari'ah interpretations through the Higher Shari'ah Authority, Stable Islamic financial transactions through an integrated supervisory and Shari'ah framework and reduction of legal and Shari'ah disputes.

Global indicators reflect the UAE’s advanced standing in this sector; total Islamic finance assets have reached Dhs 1.4 trillion, and the country ranked third globally on the 2025 Islamic Finance Development Indicator, with 43 licensed Islamic financial institutions operating within the country.

This integrated framework of legislation, Shari'ah standards, and regulatory measures underscores the UAE’s commitment to bolstering confidence in Islamic financial services and establishing a legal and Shari'ah-compliant environment that fosters innovation and growth. It also promotes integration between Islamic finance and the Halal industry, thereby reinforcing the UAE’s position as a global hub for both sectors and enhancing their sustainable economic and social impact.

WAM