On 15 July 2026, the CSSF updated its guidance entitled “Authorised Investment Funds and Islamic Finance”, initially published on 11 May 2011 (the “Guidance”).
The Guidance remains a high-level overview of the Luxembourg regulatory landscape applicable to Shariah-compliant investment funds. While retaining the existing legal approach, the update extends the scope of the Guidance and adds an express reference to the applicable anti-money laundering and counter-terrorist financing (“AML/CFT”) framework and more detailed expectations relating to Shariah boards and prospectus disclosures.
Scope and regulatory framework
Luxembourg law does not provide for a separate regulatory regime for Shariah-compliant investment funds. Authorised Shariah-compliant investment funds are subject to the same European and Luxembourg legal and regulatory requirements as other Luxembourg investment funds. The CSSF does not determine whether the investment policy of a Shariah-compliant investment fund complies with Shariah principles.
The 2011 Guidance referred only to investment funds governed by the Law of 17 December 2010 relating to undertakings for collective investment and specialised investment funds governed by the Law of 13 February 2007.
The Guidance now expressly distinguishes between investment funds authorised as products by the CSSF and vehicles which are not authorised as products by the CSSF.
In relation to authorised products, the revised Guidance expressly covers:
- undertakings for collective investment in transferable securities (UCITS);
- undertakings for collective investment governed by Part II of the Law of 17 December 2010 (Part II UCIs);
- specialised investment funds (SIFs); and
- investment companies in risk capital (SICARs).
In addition, the update confirms that authorised Shariah-compliant investment funds are subject to the Luxembourg AML/CFT framework, including the Law of 12 November 2004 and the related regulations, circulars and guidelines issued by the CSSF.
Governance of Shariah Boards
It is common practice for authorised Shariah-compliant investment funds to appoint a Shariah board to assess whether their investments comply with Shariah principles (a “Shariah Board”).
Where a Shariah Board is appointed, its role, competences and practical operation must be described in the prospectus.
A key change concerns the requirements applicable to the members of the Shariah Board. Under the 2011 Guidance, the good repute and experience requirements applied only where the Shariah Board had decision-making powers. The revised Guidance no longer draws this distinction. All members of the Shariah Board must be of sufficiently good repute and sufficiently experienced in relation to the investment policy of the relevant fund. The identities of the members, and of any persons succeeding them, must be communicated to the CSSF forthwith.
The revised Guidance also expressly refers to the application of the general requirements relating to due diligence, delegation and conflicts of interest.
Prospectus disclosures
Authorised Shariah-compliant investment funds remain subject to the standard rules governing the presentation of their prospectuses and financial reports, without additional Shariah-specific presentation requirements. The CSSF nevertheless now expects the prospectus to include:
- information on how the investments are managed from a Shariah perspective, including any purification mechanisms;
- information on the Shariah Board, its members, powers, responsibilities and remuneration;
- information on the mechanisms used to ensure continuous compliance with Shariah principles and the frequency of the relevant monitoring reviews; and
- the Shariah risk factors specific to the fund’s strategy, portfolio and other key features.
Additional Shariah-related information may also be provided in a separate report to investors, provided that the applicable standard disclosure requirements are met and the information is presented clearly and understandably.
Although the Guidance acknowledges that Shariah-compliant investment funds may also be established as vehicles not authorised as products by the CSSF, it does not further address the legal framework applicable to such vehicles.
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