The Libyan Dar al-Ifta (the religious entity that interprets Islamic law and practice) in Tripoli has issued a memorandum regarding regulations for foreign currency transactions—specifically those involving personal use, unrestricted ”Mudaraba” (profit-sharing investment), and banking commissions.
It called on the Central Bank of Libya, commercial banks, and exchange companies to review and rectify their procedures to ensure compliance with Islamic Sharia law.
Dar al-Ifta called for the abolition of the mechanism that pre-determines the exchange rate at the time of booking, noting that stipulating a deferred price is not permissible under Sharia. It explained that the system should merely reserve the right to place an order, with the actual exchange rate and the exchange of funds (taking possession) agreed upon at the time the transaction is executed.
Dar al-Ifta also affirmed that it is impermissible to require financial guarantees from exchange companies simply for acting as agents—provided there has been no transgression or negligence—and emphasized the need to halt and refund commissions imposed on them, as these lack a basis in actual service or benefit.
Furthermore, Dar al-Ifta stated that subscribing to the “Unrestricted Mudaraba” product announced by the Central Bank of Libya is not permissible until the contracts and documentation have been fully reviewed to verify compliance with the Sharia rules governing ”Qirad” (profit-sharing partnerships).
It also stressed that no commissions or fees should be deducted from customer accounts (such as cash withdrawal or ATM fees) without the provision of a distinct, actual service or benefit, and emphasized the necessity for banks to disclose all fees and their details prior to entering into agreements.
