The Dubai Financial Services Authority has launched a public consultation aimed at enhancing its Islamic finance regulatory framework, in a move designed to provide greater clarity for market participants and support the sector’s continued growth within the Dubai International Financial Centre.
The consultation, outlined in Consultation Paper No. 172, focuses on refining endorsement requirements for firms offering Islamic financial services, strengthening disclosure standards for Takaful products, and introducing targeted amendments to the regulator’s Islamic Finance Rules module.
The initiative aligns with broader national strategies, including the UAE’s ambitions to position itself as a global hub for Islamic finance and Dubai’s Economic Agenda (D33), which prioritizes financial sector expansion and innovation.
The proposals come as Islamic finance continues to gain traction globally and within the UAE. The country ranked among the top markets worldwide, supported by a strong ecosystem and growing asset base. DIFC has emerged as a key centre for Sukuk issuance, with more than $100 billion in outstanding listings, including instruments linked to environmental, social, and governance initiatives.
Charlotte Robins, Managing Director of Policy and Legal at the DFSA, said the regulator aims to ensure that its framework evolves alongside the sector. “As the Islamic finance sector continues its strong growth trajectory within DIFC, the United Arab Emirates, and globally, we want to ensure that our regulatory framework provides the clarity and certainty that firms need to operate confidently within appropriate boundaries,” she said.
A central element of the consultation is clarifying when firms require an Islamic endorsement. The DFSA proposes defining specific scenarios in which authorized entities would be considered to be conducting Islamic financial business, including when they market services as Shari’a-compliant or manage Islamic investment funds.
At the same time, the regulator has indicated that firms distributing Islamic products without making explicit claims about Shari’a compliance would not require such endorsements, provided they adhere to existing client protection rules.
The consultation also introduces enhanced disclosure requirements for Takaful products, a Shari’a-compliant form of mutual insurance. Under the proposed changes, providers would be required to clearly outline contract structures, fee mechanisms, surplus-sharing arrangements, and any potential additional contributions, strengthening transparency for consumers.
The DFSA reiterated its role as a “Shari’a systems regulator,” meaning it does not determine the religious compliance of financial products but instead requires firms to implement robust governance, controls, and risk management frameworks to support their Islamic business activities.
Industry participants, including authorized firms, market institutions, and advisers, have been invited to submit feedback on the proposals by June 19, 2026. The regulator will review submissions before finalizing amendments to its rulebook.
The consultation underscores the UAE’s broader effort to deepen its Islamic finance ecosystem, balancing regulatory clarity with innovation as global demand for Shari’a-compliant financial solutions continues to expand.
