A Memorandum of Understanding was signed for the launch of the Malta Islamic Finance Association (MIFA), signalling the go ahead by the Maltese government to set-up shop on the island to push for links with the global Islamic financial industry.

Islamic finance refers to the means by which corporations raise capital in accordance with Sharia, or Islamic law. It has a tendency to be resilient to shocks because of its emphasis on risk sharing and limits on excessive risk taking.

Among its restrictions, it prohibits the application of riba (interest or usury), in that money does not generate or beget money in itself, but it becomes productive if it is involving an activity or work; investment is subject to the rule of profit and loss sharing; investments must be lawful (by Sharia standards) and not openly against Islamic belief (for example - no pork or alcohol).

Speaking at a conference on cryptocurrency and its future, Parliamentary Secretary for Financial Services, Digital Economy, and Innovation Silvio Schembri said that The Malta Islamic Finance Association will liaise with governments, quasi government institutions, multilateral organisation, setting standard bodies, agencies and regulatory authorities in support towards its cause.

The Secretary General of MIFA, Sheikh Bilal Khan was present as a representative, following up by commenting that Brexit was on the horizon, giving MIFA a strong possibility of position Malta as the European Centre of Islamic Finance.

“With the benefit of EU passporting rights and Malta’s Commonwealth membership, Malta can also serve as a gateway to Commonwealth markets across the globe. Indeed it is the epicentre of half a billion population between Europe and North Africa and in turn to the wider Middle East,” he said.

Malta Institute of Management president Reuben Buttigieg has been pushing for the introduction of Islamic finance on the island for over a decade. He had previously said Italy’s one million muslims and 70,000 Arab holding companies could be among the first customers of a Shariah-compliant finance structure in Malta. Speaking at the signing, Buttigieg said Malta was standing out as one of the leading FinTech capitals and in the digital world and as the premier blockchain island with leading exchanges and international organisations moving their headquarters to Malta.