Halal

Halal (Arabic: حلال, literally 'permissible' or 'lawful') designates activities, products, and transactions explicitly permitted under Shariah law. In Islamic finance, Halal certification encompasses two dimensions: (1) activity screening — ensuring investment proceeds do not derive from prohibited sectors (Haram industries include alcohol, tobacco, pork, pornography, conventional banking/insurance, gambling, weapons); (2) structural compliance — ensuring the financial instrument itself (contract type, profit mechanism, risk allocation) is Shariah-permissible. The Halal screening methodology for Islamic equity funds typically excludes companies with more than 5% revenue from Haram activities and applies financial ratio screens (debt/total assets < 33%, accounts receivable/total assets < 49%, interest income/revenue < 5%). IOF's compliance engine implements automated Halal screening for all assets, investments, and counterparties using configurable sector exclusion lists and financial ratio thresholds aligned with AAOIFI, DJIM (Dow Jones Islamic Market), and MSCI Islamic Index standards.