Our Sharia Screening Methodology
How we ensure every holding meets halal standards — and what we do when they drift. Reviewed quarterly by our independent Sharia Supervisory Board.
AAOIFI-aligned screening: a two-stage filter.
Wealth8 applies the standards published by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) — the international standards body for Islamic finance. Our Sharia Supervisory Board reviews and certifies the methodology quarterly.
Wealth8 uses AAOIFI-aligned thresholds as interpreted by our Sharia Supervisory Board. Different schools of Islamic jurisprudence (madhabs) may apply different thresholds. We acknowledge this interpretive diversity and document our Board's position transparently. Compliance certification does not guarantee investment returns.
Financial ratio screens — by the numbers.
| Screen | Metric | AAOIFI-aligned threshold | Denominator | Result if exceeded |
|---|---|---|---|---|
| Debt ratio | Interest-bearing debt / Market capitalisation | < 33% | Market cap (24-month average) | Excluded from universe |
| Interest income | Interest & non-compliant income / Total revenue | < 5% | Total revenue | Excluded or purification required |
| Haram revenue | Revenue from prohibited activities / Total revenue | < 5% | Total revenue | Excluded from universe |
| Accounts receivable | Accounts receivable / Total assets | < 49% | Total assets | Excluded (excess non-tangible exposure) |
Source: AAOIFI Sharia Standard No. 21 (Financial Paper Securities). Thresholds are applied as interpreted by Wealth8's independent Sharia Supervisory Board. Market cap denominator is a 24-month rolling average to reduce volatility gaming.
Prohibited business activities.
Companies whose primary business involves any of the following are excluded entirely — no revenue threshold applies to core prohibited activities:
Cleansing residual haram income — automatically.
Even a screened stock may occasionally earn incidental haram income — for example, interest earned on corporate cash deposits held overnight. This is known as "tainted income" in Islamic finance.
Rather than excluding all stocks with any incidental interest income (which would eliminate most global equities), the accepted scholarly approach (Tazkiyah al-Mal) is income purification: the proportionate amount is calculated and donated to charity on your behalf.
- Calculated quarterly on each holding
- Donated automatically to registered UK charities of your choice
- Full transparency: quarterly purification report in your dashboard
- Board-certified methodology — not a marketing claim
How purification is calculated
For each screened holding, the proportion of total income attributable to impermissible sources is calculated from the company's financial statements.
That proportion of your proportional share of dividends or income received is then donated to charity. The amount per holding is typically very small — often fractions of a penny per £1,000 held.
Example: A technology company earns 0.3% of revenue from interest on deposits. If your holding generates £100 in income, £0.30 is the purification amount — donated automatically.
Our Sharia Supervisory Board.
Wealth8's independent Sharia Supervisory Board comprises Islamic finance scholars qualified to AAOIFI standards. The Board reviews portfolio composition quarterly and issues a compliance certificate. Board members are independent of Wealth8's investment management function.
Specialises in Sharia-compliant financial instruments and Islamic capital markets regulation. Qualified in Islamic jurisprudence (fiqh al-muamalat).
Expertise in Hanafi and Maliki jurisprudence applied to contemporary financial products. Doctoral research in Islamic banking regulation.
Sharia compliance certification does not guarantee investment returns. Interpretations of Islamic law may vary across jurisprudential schools (madhabs — Hanafi, Shafi'i, Maliki, Hanbali). Wealth8 discloses the Board's methodological position and acknowledges that other scholars may hold different views on specific instruments.
Screening methodology — frequently asked.
Wealth8 applies AAOIFI-aligned standards as interpreted by our independent Sharia Supervisory Board. We use AAOIFI's published screening criteria (Sharia Standard No. 21) as our primary reference framework. We do not claim formal AAOIFI institutional certification — such certification requires a separate audit process. We are transparent about this distinction.
Our quarterly review cycle means the portfolio is formally certified four times per year. If a material event causes a holding to clearly breach Sharia thresholds between reviews (e.g. a company announces entry into a prohibited sector), our Sharia Liaison Officer can trigger an interim review. The Board sets the threshold for interim action in our internal governance document.
The Board's primary framework draws from Hanafi and Maliki jurisprudence, both of which broadly align with AAOIFI standards on financial screening. Where schools diverge — notably on the permissibility of certain Sukuk structures — the Board adopts the more conservative position and documents its reasoning. We publish the Board's quarterly rationale for all major decisions.
For each holding, we obtain the company's most recent audited financial statements and calculate the proportion of total income attributable to impermissible sources (typically interest on deposits or receivables). We apply that percentage to your proportional share of any income received (dividends or distributions) during the period. The resulting amount is donated to your designated charity or to Wealth8's default charitable pool. The quarterly report shows this calculation for every holding.
Not universally. Certain Sukuk structures (particularly exchangeable Sukuk and some Musharakah Sukuk with guaranteed capital return) are disputed among scholars. The AAOIFI has issued specific guidance (Sharia Standard No. 17) on permissible Sukuk structures. Wealth8 holds only Sukuk structures approved by our Sharia Supervisory Board — which, currently, means Ijarah (lease-based) and Murabaha Sukuk. We do not hold structures the Board considers doubtful, and we document the Board's reasoning when excluding a specific issuance.
Conventional UK gilts are interest-bearing instruments and are not Sharia-compliant — Wealth8 does not hold them. The UK government has issued sovereign Sukuk (Sharia-compliant bonds structured as Ijarah lease arrangements) which do not carry riba. These are evaluated on a case-by-case basis by our Sharia Supervisory Board before inclusion in any portfolio. UK Treasury Bills and conventional money market instruments are similarly excluded — Wealth8's riba-free cash equivalent uses Murabaha-structured instruments instead.
Wealth8 screens portfolios for Sharia compliance and manages income purification — these are distinct from your personal zakat obligation. The platform does not calculate zakat on your behalf. Zakat is typically due at 2.5% on nisab-exceeding wealth held for a lunar year (hawl), and your Wealth8 ISA portfolio value may form part of that calculation. We provide quarterly portfolio valuations suitable for your own zakat reckoning; a Sharia adviser or your local imam should be consulted for the specific calculation. Zakat on property held outside the UK, remittances, and foreign currency accounts is not within the scope of Wealth8's platform.
The methodology is documented. The Board is independent. Your holdings are screened quarterly.
FCA authorised. FSCS protection. AAOIFI-aligned Sharia review.
Capital at risk. Sharia compliance assessed by Wealth8's independent Sharia Supervisory Board. Compliance does not guarantee investment returns.