In brief

• AAOIFI recently announced that there will be a major review of how the Islamic finance industry operates through the introduction of seven new standards.

• The seven new standards are designed to assist scholars decide whether financial activities and products conform with Shari'a principles and address issues including: financial rights, bankruptcy, capital protection, entrusting money to an agent for investment, contract termination, liquidity management (including sources and uses of funds and offering rules for calculating and distributing profits from investment instruments) and types of trust.

• The standards seek to strengthen the certification process for scholars and provide new guidance on the relationship between Islamic financial firms and their Shari'a boards similar to international best practices on terms of reference for financial institutions' board of directors.