Fatwa

Fatwa (Arabic: فتوى, plural: Fatawa) is a formal Islamic legal opinion or ruling issued by a qualified scholar (Mufti or Mujtahid) in response to a question on Islamic law. In Islamic finance, fatwas are the primary instrument through which Shariah Supervisory Boards (SSBs) certify that financial products, contracts, and transactions comply with Shariah. A product fatwa examines the contractual structure, underlying assets, economic substance, and compliance with AAOIFI standards before issuing approval. All IOF platform products carry documented fatwa references from their approving Shariah boards. Fatwas in finance are typically issued at three levels: (1) institutional SSB fatwas — for individual bank products; (2) national Shariah council fatwas — binding on all institutions in a jurisdiction; (3) AAOIFI and OIC Islamic Fiqh Academy resolutions — serving as persuasive authority globally. Unlike legal precedent in common law, fatwas are advisory — though institutional and regulatory fatwas are effectively binding in practice.