Haram

Haram (Arabic: حرام, literally 'forbidden' or 'prohibited') designates activities, products, and transactions explicitly prohibited under Shariah law. In Islamic finance, Haram applies to: (1) financial instruments — interest-bearing loans, conventional bonds, most derivatives (due to Riba and Gharar); (2) prohibited sectors — alcohol, tobacco, pork and pork by-products, adult entertainment, conventional financial services, gambling/gaming, weapons (controversial), cannabis; (3) specific contract elements — predetermined fixed returns on capital, short-selling without ownership, naked options. The three core financial prohibitions are Riba (interest), Gharar (excessive uncertainty), and Maysir (gambling). Islamic financial institutions implement Haram avoidance through Shariah screening (negative screening of prohibited sectors), structural compliance (contract design that avoids prohibited elements), and ongoing Shariah audit by the Supervisory Board. IOF's compliance engine enforces Haram restrictions at the transaction, product, and portfolio level with real-time screening against configurable exclusion lists.