The «SalamPay» mobile application complies with international standards for conducting financial activities according to the AAOIFI.
The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), formerly known as the Financial Accounting Organization for Islamic Banks and Financial Institutions (hereinafter AAOIFI), was established in accordance with the Agreement of Association signed by a number of Islamic financial institutions on Safar 1, 1410 (February 26, 1990) in Algiers. The organization was registered on Ramadan 11, 1411 (March 27, 1991) in the Kingdom of Bahrain as an international independent non-profit organization with the status of a legal entity.
The purpose of the AAOIFI is to develop accounting, auditing, governance and ethical thought relating to the activities of Islamic financial institutions, as well as dissemination and practical application of this concept by providing training, holding conferences, publishing periodicals and research, and through other means. This also includes the drafting, publication, clarification, verification and correction of existing accounting standards, and the audit of these institutions in accordance with the provisions and principles of Sharia, which is a system that covers all aspects of life, and in accordance with the environment in which these institutions are established. This strengthens the trust that those who access financial statements have in the information published by these institutions, and encourages them to invest [money] with them and use their services.
Sharia Standard No. 1. Trading in Currencies.
1. Scope of the Standard
This standard covers issues of both actual and constructive possession of currencies, the use of modern means of communication in currency trading, exchange of currencies in the context of the bilateral settlement of debts owed by the parties to the exchange, dealing in currencies in money markets, bilateral promises to buy and sell currencies, deferment of the markets, bilateral promises to buy and sell currencies, deferment of the delivery of one of two countervalues in currency trading, and some cases delivery of one of two countervalues in currency trading, and some cases practised by the Institutions.
The standard does not cover the following cases: those where there are no trading in currencies; the effect of goldsmithery in selling gold and silver; transfers of debts that do not involve exchanges of currency; and silver; transfers of debts that do not involve exchanges of currency; and the discounting of bills of exchange.
2. Shari’ah Ruling on Trading in Currencies
2.1 It is permissible to trade in currencies, provided that it is done in compliance with the following Shari’ah rules and precepts:
2.1.1 Both parties must take possession of the countervalues before dispersing, such possession being either actual or constructive.
2.1.2 The countervalues of the same currency must be of equal amount, even if one of them is in paper money and the other is in coin of the same country, like a note of one pound for a coin of one pound.
2.1.3 The contract shall not contain any conditional option or deferment clause regarding the delivery of one or both countervalues.
2.1.4 The dealing in currencies shall not aim at establishing a monopoly position, nor should it entail any evil consequences any evil consequences to the interest of individuals or societies.
2.1.5 Currency transactions shall not be carried out on the forward or futures market.
2.8 Use of modern means of communication for currency trading
2.8.1 Bilateral contracting between two parties at different remote places using modern communication means has the same juristic consequences as execution of the contract in one and the same place.
2.8.2 An offer made for a stated period, which is transmitted by one of the prescribed means of communication, remains binding on the offeror during that period. The contract is not completed until acceptance by the offeree, and taking possession of the countervalues (either actual or constructive) by both parties, has taken place.
2.11 It is permissible to execute a financial transfer of money (remittances) in a currency different from that presented by the applicant for the transfer. This transaction consists of a currency exchange effected through actual or constructive possession by delivering an amount of currency that is evidenced by a bank draft, followed by the transfer of the amount using currency that is bought by the applicant for the transfer of money. It is permissible for the Institution to charge a fee transfer of money.
3. Date of Issuance of the Standard
This Standard was issued on 27 Safar 1421 A.H., corresponding to 31 May 2000 A.D.
The Shari’ah Basis for the Standard
Item 10. The basis of the permissibility of the combination of currency exchange and transfer of money is the achievement of constructive possession by virtue of a bank draft for the amount that is given in one currency in return for an amount paid in another currency for the purpose of its transfer. In this regard, there is a decision by the International Islamic Academy of Fiqh that reads: “If a transfer of money is to be made in a currency different from the currency of the amount paid by the applicant, then the transaction is based on currency exchange and transfer of money. The currency exchange takes place before the transfer, that is, the customer pays the amount of money to the bank and the bank, after agreeing on the currency exchange rate that is printed on the receipt delivered to the customer, issues a bank draft on the basis of transfer of debt in the sense that has been mentioned.”
Approval of the Standard
The Shariah Standard governing currency trading was approved by the Shariah Board on Safar 25-27, 1421, which corresponds to May 29-31, 2000.