Why is HelloGold Shariah Compliant?

The Islamic Finance principles

Islamic finance observes governing principles derived from Fiqh, resulting in financial transactions based on justice and ethics. As the world’s first online gold platform to be endorsed as Shariah-compliant by the Shariah Supervisory Board of Amanie Advisors, HelloGold strives to provide the Muslim community with a fair and transparent channel to buy and sell gold. HelloGold’s business model fully complies with the core principles of Islamic finance in the following way:

1. Ribawi — Gold is one of the 6 Ribawi items (staple, everyday commodity) governed by stringent transaction rules that were created to prevent injustice or inequality between transacting parties. Ribawi items must be bought and sold on spot and in equal quantities if exchanged in kind. On the HelloGold platform, users are able to see transparent buy and sell prices including all fees before entering into a transaction. Transactions are performed on spot at a mutually agreed monetary price and gold weightage i.e. gold becomes legally owned by the buyer instantly when cash payment is made to HelloGold.
2. Gharar — Islamic finance forbids uncertainty-based transactions (Gharar). In line with this principle, gold purchased through HelloGold is fully backed by 99.99% physical gold (the purest type of gold in the market), insured and stored in professionally-secured vaults in Singapore. This eliminates elements of Gharar arising from uncertainty on the existence of the physical gold. This is in contrast to most gold investment accounts (a.k.a. “Paper gold”) whereby the seller does not rightfully own the gold purchased by customers at the point of sale.

How did HelloGold become the first platform to be recognised as Shariah-compliant?

The principles governing gold investment have been around for centuries. But over the last few years gold products and the different ways we sell gold have become more complex and sophisticated (think e-commerce, gold certificates), stretching the meaning of the principles and making them open to different interpretations. As a result buyers were confused and sellers were not able to offer better products to the Islamic world.

Keen to solve this problem, the World Gold Council (WGC), and the Accounting and Auditing Organisation of Islamic Financial Institutions (AAOIFI) worked together to come to a definitive agreement on what Shariah-compliant gold investment really is for modern finance. In November 2016, the AAOIFI issued the Shariah Standard on Gold, a set of rules for gold investment recognised by the most preeminent scholars of the Islamic world.

During this time HelloGold worked with Amanie Advisors to design processes that were compliant with the new rules. This enabled HelloGold to be recognised as Shariah-compliant from the moment that the new Shariah gold standard was announced — the first in the world as reported by Finextra.

The organisations involved

AAOIFI is a not-for-profit organization that was established to maintain and promote Shariah standards for the Islamic finance industry. AAOIFI Shariah standards have been used as a basis of national Shariah guidelines in Malaysia and Indonesia and these standards have been made part of mandatory regulatory requirement in Bahrain, Oman, Pakistan, Sudan, and Syria. Many other countries including the UAE, Qatar and the UK have voluntarily adopted the AAOIFI standards as a basis of internal guidelines by leading Islamic financial institutions.

The World Gold Council (WGC) is also a not-for-profit organization. Its members include the world’s leading gold mining companies. Based in the UK, with operations in India, China and the US, the WGC is the global authority on the gold market.

Amanie Advisors are guided by its international Shariah Supervisory Board, comprising of four globally renowned Shariah scholars including Dr. Mohd Daud Bakar, the Chairman of the Shariah Advisory Councils of Bank Negara Malaysia. Amanie Advisors have worked with renowned financial institutions around the world, including the World Gold Council, Singapore Exchange (SGX), the Nomura Group and the Macquarie Group, in developing Shariah-compliant financial products.

The Amanie Advisors are also auditors for HelloGold in all aspects related to Shariah law. They have certified our processes and continue to review them regularly.