November 13, 2026
The UAE has rolled out a wide-ranging rulebook for Islamic financial institutions and takaful operators.
According to Pinsent Masons, the change could push banks, insurers and investors to revisit how they structure and document sharia-compliant products.
The rules are contained in Central Bank Regulation No. 1/2026, which gives effect to parts of Federal Decree-Law No. 50/2022. They set detailed requirements for a long list of Islamic finance structures, including murabaha, ijarah, salam, istisna’a, mudaraba, musharaka and wakala.
The regulation also covers Islamic deposits, investment accounts, guarantees, documentary credits and takaful products.
Its reach extends across the market. Islamic banks and finance companies in the UAE fall within scope, as do conventional lenders running Islamic “windows”. Takaful and retakaful operators are also covered, along with corporates and project sponsors that rely on Islamic financing and investors that take part in sharia-compliant financing and investment deals.
In effect, the regulation draws together principles that already guided Islamic financial transactions and places them inside a formal supervisory regime. Teams responsible for in-house legal, compliance, risk and sharia governance are expected to pay close attention, given the focus on giving Islamic transactions and institutions a firmer regulatory footing.
The move adds to a wider overhaul of Islamic finance supervision in the country. Earlier in the year, the Dubai Financial Services Authority (DFSA) widened its Islamic Finance Rules (IFR) so that more sharia-compliant securities offerings and Islamic funds fall under its oversight.
The change was intended to tighten supervision of Islamic capital markets activity in the Dubai International Financial Centre (DIFC).
The DFSA’s revisions followed its consultation paper CP172. Firms that promote products as Islamic or sharia-compliant may now have to meet DFSA requirements on governance, disclosures and sharia compliance processes.
Issuers raising capital through Islamic instruments, managers of Islamic investment funds, and sponsors that structure or market sharia-compliant products across the region are likely to be the most affected.
Pinsent Masons Islamic finance expert Seya Rahnema said, “The regulation represents an important development in the UAE’s Islamic finance framework. By setting out detailed rules governing a wide range of Islamic finance products and structures, it should enhance legal and regulatory certainty for market participants and support greater consistency in the way transactions are structured and documented.”
He added, “The breadth of products covered by the regulation means businesses involved in Islamic finance transactions may need to review existing arrangements to assess whether updates to documentation, governance processes or compliance frameworks are required.”
Rahnema also said, “One of the most significant aspects of the regulation is the extent to which it codifies principles applicable across different forms of Islamic finance. Greater regulatory clarity can help facilitate market growth by providing increased confidence for institutions, investors and counterparties when entering into sharia-compliant arrangements.”
Pinsent Masons financial regulation expert Marie Chowdhry said, “Firms should review whether existing or planned sharia-compliant securities offerings or Islamic fund offerings are now subject to the IFR and assess internal compliance frameworks, governance arrangements and disclosure documentation against the updated rules.”
She continued, “Businesses should also consider whether offering documents, marketing materials and sharia governance processes require updating. Legal and regulatory advice will likely be required where products may newly fall within the expanded scope of the IFR.”
SOURCE https://fintech.global/2026/11/13/islamic-banks-face-document-reviews-under-new-uae-rules/
Categories: Islamic Banking, Islamic Finance, UAE