Islamic Banking in the European Union legal framework

This chapter deals with Islamic banking in the European Union legal framework. In particular, it attempts to ascertain whether Islamic banking can operate in the common market having regard to the Eu framework for credit institutions, investment firms, undertakings for collective investment in transferable securities (UCITS) and payment institutions. The analysis concludes that there is no formal limit to the accommodation process, thanks to the functional-based approach of EU law. However, there are three "grey" areas to deal with in the Islamic banking accommodation process: i) the role of Shari'a supervisory board, ii) the enforceability of Shari'a rules within customer-provider contracting relationship and, iii), the consistency of Islamic banking with EU-based transparency rules.