Islamic Finance Glossary.
The Language of Ethical Trading.

The Accounting and Auditing Organization for Islamic Financial Institutions. An independent international body that establishes the definitive accounting, auditing, governance, and Shariah standards for the global Islamic finance industry.

A non-refundable deposit or down payment paid by a buyer to a seller. If the contract is completed, the Arbun is deducted from the purchase price. If the buyer defaults, the seller retains the Arbun.

A deferred payment sale. A contract where the buyer purchases an asset and agrees to pay the price (which includes a pre-agreed profit margin for the seller) at a later date, either in a lump sum or in installments.

A prolonged period in which investment prices fall, accompanied by widespread pessimism. Technically defined as a price decline of 20% or more from recent highs.

A proprietary Titan Protect methodology that requires an asset to pass both strict ethical/Shariah compliance tests AND rigorous quantitative valuation tests before it is considered a viable investment.

A key financial screen in Islamic investing. According to AAOIFI, a company's total interest-bearing debt must not exceed 33% of its total assets or 12-month average market capitalisation.

A framework used by investors to evaluate corporate behaviour. Environmental looks at carbon footprint; Social looks at labour practices; Governance looks at board diversity and executive pay.

Excessive uncertainty, ambiguity, or deception in a contract. Islamic finance prohibits transactions where the subject matter, price, or delivery is highly uncertain.

Lawful or permissible under Islamic law. In finance, it refers to income, investments, and transactions that comply with Shariah principles.

Unlawful or prohibited under Islamic law.

An Islamic leasing contract. The financier purchases an asset and leases it to the client for a fixed rental fee over a specified period.

Gambling or speculation. The acquisition of wealth by chance rather than effort. Strictly prohibited in Islamic finance.

A profit-sharing partnership where one party provides the capital (Rab-ul-Mal) and the other provides the expertise and management (Mudarib). Profits are shared at an agreed ratio; financial losses are borne entirely by the capital provider.

A cost-plus financing structure. The financier buys an asset and sells it to the client at a disclosed markup. The client pays in installments.

The minimum threshold of wealth a Muslim must hold for a full lunar year before Zakat becomes obligatory. Usually calculated as the cash equivalent of 595 grams of silver.

The process of cleansing investment income (dividends) by donating the percentage of that income that was generated from impermissible sources (like interest on cash reserves) to charity.

Usury or interest. The generation of money from money without underlying productive economic activity. Strictly prohibited in Islam.

The status of a financial product, stock, or service that adheres to Islamic law. For equities, this requires passing both business sector screens and financial ratio screens.

Often referred to as "Islamic bonds," Sukuk are certificates representing proportional ownership in an underlying tangible asset, service, or project, generating a return from that asset rather than from interest.

Islamic cooperative insurance based on mutual risk-sharing. Participants contribute to a shared pool to guarantee each other against loss, avoiding the Gharar (uncertainty) and Riba (interest) of conventional insurance.

The third pillar of Islam; an obligatory annual charitable payment of 2.5% on qualifying wealth (above the Nisab threshold) held for a full lunar year.