Financial Crime World

Bahrain Ranks First Globally in Islamic Finance Regulations

A Leader in Islamic Financial Regulations

Bahrain has emerged as a pioneer in Islamic financial regulations on an international level, securing the top spot globally in this year’s edition of the ICD-LSEG Islamic Finance Development Report. The report highlights Bahrain’s commitment to fostering a robust and dynamic Islamic financial sector.

Key Findings from the Report

  • Bahrain achieved an overall ranking of fourth globally and second in the Middle East & North Africa (MENA) region.
  • It ranked first in the Gulf for Islamic banking and third globally for Islamic finance governance, indicating its excellence in regulation, corporate governance, and Shariah governance.

Online Events Led by Major Institutions

The report noted that Bahrain has been a hub for online events led by major Islamic financial institutions, including:

  • The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI)
  • General Council for Islamic Banks and Financial Institutions (CIBAFI)
  • International Islamic Financial Market (IIFM)

Commitment to Fostering a Robust Islamic Financial Sector

“The Central Bank of Bahrain is committed to fostering a robust, transparent, and dynamic Islamic financial sector by putting in place a regulatory framework aligned with international best practices while supporting innovation and growth in Islamic finance,” said Khawla Ahmed Hasan Ibrahim, Director of Islamic Financial Institution Supervision at the Central Bank of Bahrain.

Advanced Fintech Ecosystem

Bahrain’s solid foothold in financial services has made it uniquely positioned to cater to the needs of Islamic finance institutions as well as fintechs and startups offering Sharia-compliant products and services. “This record achievement is a testament to the caliber of the financial ecosystem in Bahrain, particularly when it comes to Islamic banking,” said Dalal Buhejji, Executive Director of Business Development for Financial Services at the Bahrain Economic Development Board.

The report highlighted fintech, digital banking, and artificial intelligence (AI) as key emerging trends that have had pivotal impacts on the development of Islamic banking in the decade leading up to 2022. The ICD-LSEG Islamic Finance Development Indicator (IFDI) was used to evaluate the performance of 136 countries across five indicators:

  • Financial performance
  • Governance
  • Knowledge
  • Sustainability
  • Awareness

Sustainable Finance Practices

The report noted a surge in the practice of sustainable finance at Islamic banks, which has led to the development of new frameworks covering environmental, social, and governance (ESG) and sustainable investments.

Conclusion

Bahrain’s ranking as the top country for Islamic finance regulations is a testament to its commitment to innovation and growth in the sector. The Central Bank of Bahrain and other regulatory bodies will continue to support the development of Islamic finance by providing a supportive ecosystem for investors and institutions alike to thrive within the Kingdom’s financial services sector.