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Our Stock, ETF, and Sukuk (Islamic Bonds) Screening Methodology

At Musaffa, our qualitative and quantitative screening process is guided by AAOIFI Shariah standards. This ensures unified, accurate, and consistently detailed Shariah compliance assessments across stocks, ETFs, and sukuk worldwide.

Shariah Compliance Certificates

Musaffa's stock, ETF, and sukuk screening methodologies are based on AAOIFI Shariah standards and independently certified by qualified Shariah scholars.

AAOIFI

Shariah Standards Authority

Accounting and Auditing Organization for Islamic Financial Institutions

AMANAH ADVISORS

Independent Shariah Certification

Global Islamic Finance & Fintech Services

Shariah Advisors

Shaikh Dr. Aznan Hasan

Shariah Board member of Accounting and Auditing Organization for Islamic Financial Institutions (“AAOIFI”)

Mufti Faraz Adam

Well-known UK-based Islamic Finance consultant and head of the global Shariah advisory firm Amanah Advisors.

Prohibited Business Activities

Companies involved in these activities are classified as Not Shariah-compliant during Musaffa’s screening process.

  • Non-halal foods
    Non-halal foods
    Non-halal foods
  • Alcohol
    Alcohol
    Production & sales
  • Gambling
    Gambling
    Casinos, betting, lotteries
  • Adult Entertainment
    Adult Entertainment
    Explicit content
  • Tobacco
    Tobacco
    Manufacturing & sales
  • Marijuana
    Marijuana
    Recreational cannabis
  • Weapons
    Weapons
    Arms & defense products
  • Cloning
    Cloning
    Human cloning activities
  • Interest-based Finance
    Interest-based Finance
    Conventional banking
  • Excess Debt
    Excess Debt
    High debt ratios

AAOIFI Stock Screening Methodology

Musaffa uses the official AAOIFI Shariah screening methodology to determine if a company’s business activity and financial structure are Shariah-compliant before labeling any stock or ETF as Halal.

Three Core AAOIFI Financial Screening Criteria

  1. 1 Non-Permissible Income Ratio

    We check the proportion of a company's total revenue that is generated from non-permissible (haram) activities, including interest, alcohol, gambling, pork, and adult content.

    Impermissible Revenue ÷ Total Revenue

    Not Allowed Halal Zone
    100%

    If non-permissible income exceeds 5 percent of total revenue, the stock or ETF becomes Not Shariah-compliant.

  2. 2 Interest-Bearing Assets Ratio

    We check the proportion of a company's total assets that are held in interest-bearing instruments, such as conventional bonds or interest-bearing cash and deposits.

    Interest-Bearing Assets ÷ Trailing 36-Month Avg Market Value

    Not Allowed Halal Zone
    100%

    If interest-bearing assets exceed 30 percent of market cap, the stock or ETF becomes Not Shariah-compliant.

  3. 3 Interest-Bearing Debt Ratio

    We check the proportion of a company's total debt that is interest-based, such as conventional loans and bonds.

    Interest-Bearing Debt ÷ Trailing 36-Month Avg Market Value

    Not Allowed Halal Zone
    100%

    If interest-bearing debt exceeds 30 percent of market cap, the stock or ETF becomes Not Shariah-compliant.

  4. Final Decision

    A stock or ETF must pass all three AAOIFI financial screening criteria to be classified as Shariah-compliant. Failing any criterion results in a Not Shariah-compliant status.

    Income + Assets + Debt
    =

    Halal (Shariah-compliant)

Purification (Shariah Requirement)

Purification is the process of removing and donating the non-permissible portion of your investment income. If it is not purified, that amount becomes not Halal (haram) for the investor.

Musaffa automatically calculates the exact purification amount using AAOIFI standards and donates it to your selected charities, helping you fulfill your Shariah obligation with accuracy, ease, and confidence.

Why Purification Is Required Under AAOIFI Standards

AAOIFI Shariah standards allow a company to remain Shariah-compliant even if a small portion of its income (below 5 percent) comes from non-permissible sources, such as incidental interest.

Any income the investor receives from this non-permissible portion must be purified by donating it to charity, as required by AAOIFI.

Purification is a mandatory Shariah obligation for investors, not an optional step.

How Purification Works on Musaffa

Verified and approved by qualified Shariah scholars

  1. Step 1: Identify
    Non-Permissible Income Identified

    Musaffa identifies when a company generates incidental non-permissible income that remains within AAOIFI-permitted limits.

    You do not need to review financial statements or calculate anything manually.
  2. Step 2: Calculate
    Exact Purification Amount Calculated

    Your purification amount is calculated automatically based on the company's verified non-permissible income ratio for the period during which you hold the stock or ETF.

    No estimates No approximations No manual calculations
  3. Step 3: Donate
    Donation and Completion of Purification

    You can complete purification across your entire portfolio. All purification actions are securely recorded for full transparency and accountability.

View Purification Calculator