The Dubai Financial Services Authority (DFSA) has proposed updates to its Islamic finance regulatory framework, seeking to clarify when firms must obtain an Islamic endorsement and strengthen disclosure requirements for Takaful products.

The DFSA issued Consultation Paper No. 172, setting out clearer criteria for when authorised firms or market institutions “hold themselves out” as conducting Islamic financial business.

This includes cases where firms state that their operations, funds, or products are Shari’a-compliant, offer financial services linked to Islamic products, or manage Islamic or Shari’a-compliant funds.

Under the proposed changes, firms that simply distribute or provide access to Islamic financial products will not require an Islamic endorsement, provided they do not represent those products or services as Shari’a-compliant and continue to meet existing client protection requirements.

The consultation also introduces enhanced disclosure requirements for Takaful, the Shari’a-compliant mutual insurance model.

Firms offering Takaful products must disclose key contract features, fee structures, surplus-sharing arrangements, and any potential additional contributions, regardless of whether they hold an Islamic endorsement.

The DFSA operates as a Shari’a systems regulator, meaning it does not assess the religious compliance of financial products but instead requires authorised firms to maintain appropriate systems and controls to manage Islamic financial risks.

“As the Islamic finance sector continues its strong growth trajectory within DIFC, the UAE, and globally, we want to ensure that our regulatory framework provides the clarity and certainty that firms need to operate confidently,”

said Charlotte Robins, Managing Director of Policy and Legal at the DFSA.

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