ALFI publishes best practices for Islamic funds in Luxembourg
The Association of the Luxembourg Fund Industry (ALFI) has published its collection of best practices for setting-up and servicing Islamic funds to provide a greater level of understanding and consistency of the requirements and expectations to this growing market sector.
“2012 has been a very active year for the Luxembourg Islamic finance community with several new Shariah-compliant funds launched. Luxembourg currently ranks number five worldwide and first in Europe in the number of Shariah-compliant domiciled funds, at 41 funds with EUR4bn in assets under management,” says Marc Saluzzi (pictured), chairman of ALFI.
Islamic funds are investment vehicles that follow the religious laws, known as Shariah. They operate under a strict set of prohibitions, including the charging and receiving of interest, speculation or investment in certain commodities such as pork related products or activities such as gambling.
ALFI’s collection of best practices provides information and guidance on the legal framework, the fund set-up process, administration, custody and depository bank services for Islamic funds in Luxembourg. It also gives a high level indication of whether Islamic finance instruments are compatible with Luxembourg Ucits laws and should enable service providers who are already active in this field to align themselves with greater consistency and provide guidance to new entrants as to all the areas that need to be considered.
Saluzzi says: “Most service providers in Luxembourg already have dedicated teams looking at Shariah funds. This collection of best practices will further contribute to establish Luxembourg as the centre of reference for servicing Shariah compliant funds, whether they are domiciled here or elsewhere.”