MFSA Strengthens Islamic Finance Framework with Revised Shariah Fund Guidance

Malta is positioning itself more assertively in the Islamic finance sector following the publication of comprehensively revised guidance for Shariah-compliant investment funds by the country’s financial services regulator. 

The Malta Financial Services Authority (MFSA) has overhauled its Guidance Note for Shariah-Compliant Funds following an extensive review aimed at improving regulatory clarity and practical implementation for market participants. The move forms part of a wider modernisation strategy for Malta's financial services framework. 

The updated guidance is designed to enhance transparency for fund promoters, investment managers, and Shariah Advisory Boards - the religious governance bodies that ensure compliance with Islamic principles. By streamlining compliance requirements, the regulator hopes to make Malta a more attractive domicile for Islamic financial products. 

The revision aligns Malta's framework with current international standards and recent developments in global Islamic finance markets, which have grown substantially in recent years across the Middle East, Southeast Asia, and beyond. 

“The updated Guidance Note reflects the MFSA's objective to deliver a transparent, accessible, and internationally aligned framework for Shariah-compliant funds,” said Clare Farrugia, Head of Strategy, Policy and Innovation at the MFSA. “By modernising the structure and enhancing regulatory clarity, we aim to minimise uncertainty for market participants and reinforce Malta's position as a jurisdiction of choice for Islamic investment structures.” 

The initiative complements other MFSA work in Islamic capital markets, including development of frameworks for sukuk, Islamic bonds structured to comply with religious prohibitions on interest-bearing debt.