The binding regulatory standard that PERMITS the contract the OIC Fiqh Academy prohibits

This corpus already carries the prohibition. The International Islamic Fiqh Academy (OIC), in Resolution No. 179 (5/19), holds that classical tawarruq is permitted but that the bank-structured and reverse forms are prohibited, because they involve engineered collusion between financier and customer to manufacture present cash for a larger future debt. A reader auditing a real product needs the other primary text too — because the contract the Academy prohibits is not a fringe practice. It is licensed, standardised and supervised by a national central bank, and a reader who only ever sees one side has been handed a verdict rather than the disagreement.

This entry is that other side, in its own words. Bank Negara Malaysia — Malaysia's central bank — publishes a policy document titled simply 'Tawarruq', reference BNM/RH/PD 028-8, issued on 28 December 2018. It is not advice. The document defines its own force: the marker 'S' denotes 'a standard, an obligation, a requirement, specification, direction, condition' that 'must be complied with', and states plainly that 'Non-compliance may result in enforcement action'; the marker 'G' denotes guidance 'that are encouraged to be adopted'. It applies to licensed Islamic banks, licensed takaful operators, licensed banks carrying on Islamic banking business and prescribed development-finance institutions. It is issued under statute, pursuant to the Islamic Financial Services Act 2013 and the Development Financial Institutions Act 2002. It sets its own commencement — 'This policy document comes into effect on 28 December 2018.' — and it replaces an earlier standard rather than sitting beside one: 'This policy document supersedes the Tawarruq policy document issued on 17 November 2015.' This is a binding regulatory Shariah standard, in force over a real banking sector.

Its definition of the contract is the same one the Academy describes. Paragraph 9.1, a mandatory 'S' provision: 'A tawarruq consists of two sale and purchase contracts. The first involves the sale of an asset by a seller to a purchaser on a deferred basis. Subsequently, the purchaser of the first sale will sell the same asset to a third party on a cash and spot basis.' Both bodies are looking at the same mechanism. They part company on what to do about it.

What the standard does with it is impose mandatory conditions, and the striking thing is how precisely those conditions track the defects the prohibition names. The second sale may not close the circle back to where it started: 'the seller in the first sale and purchase contract shall not be the purchaser in the second sale and purchase contract in the same tawarruq', and 'the tawarruq shall not contain any condition that requires the purchaser to promise that the asset will be sold to its original seller.' There must be a real asset, not a bookkeeping entry: the subject matter must be 'recognised by Shariah as valuable, identifiable and deliverable' and 'already in existence and owned by the seller in each respective sale and purchase contracts involved'. Ownership must actually move before the onward sale: 'The purchaser shall take possession of the asset before the asset can be sold to a third party.' The two legs may not be fused into one instrument: 'All sale and purchase contracts in the tawarruq shall be executed by entering into a separate and independent sale and purchase contract.' And the customer's exit must be genuine rather than nominal — the contract 'shall not contain any terms and conditions that restrict the purchaser from taking delivery of the asset or create an obligation for the purchaser to sell the underlying asset', with the same protection carried into any agency arrangement: the wakalah contract 'shall not restrict the principal or his purchasing agent from taking delivery of the asset'. Some assets are barred outright from being traded this way — 'gold, silver and currencies', assets under construction, and 'assets which are debt in nature'.

And then the provision a careful reader should not skim past. Paragraph 17.1: 'Dual-agency may be implemented in a tawarruq.' The standard describes what that means, including 'an action of one of the contracting parties who acts as an agent to purchase an asset on behalf of the other contracting party, and subsequently acts as an agent to sell the asset on behalf of the same contracting party to himself'. That is the bank arranging both legs on the customer's behalf — the bank-arranged form, permitted subject to sequencing, disclosure and documentation requirements. The Academy's resolution describes the prohibited structure as one where 'the seller (the financer) arranges selling of the good, either directly or through an agent'. So the disagreement is not a misunderstanding between the two texts about what is happening. It is a genuine difference of ruling about the same arrangement, and this site does not have the standing to settle it.

One honesty note belongs here, because it would be easy to misreport: the policy document does not name the Fiqh Academy, or any other standard-setter, anywhere in its text. It is not written as a rebuttal, and it should not be read as one. What can be said is narrower and verifiable — that a binding national standard permits, under conditions, a structure that a transnational collective ijtihād body has ruled prohibited.

The most valuable paragraph in the document is the one that concedes the most. Appendix 1, headed 'Legitimacy of tawarruq', cites a single Qur'anic verse on the general permissibility of trade. Then, under the heading for the Sunnah, it says this: 'There is no direct juristic authority from the Sunnah of the Prophet (peace be upon him) regarding the legitimacy of the tawarruq. It is deemed permissible based on the general permissibility of sales in Islamic law.' That is the regulator, in its own binding standard, stating that the instrument rests on a general permission rather than on any specific authority. It is an unusually candid thing for a supervisory document to print, and it belongs in this corpus precisely because it does not oversell.

So what should a reader do with this? Not treat regulatory approval as a Shariah clearance — a licence proves that a supervisor has set conditions, not that a contract is sound, and the audits on this site grade tawarruq-based products as contested for exactly that reason. But equally, not treat the contested grading as a settled verdict of impermissibility. Two primary sources, both serious, both public, disagree; one of them concedes there is no direct authority for the instrument in the Sunnah, and the other says the arranged form manufactures debt-for-cash and is therefore riba. A reader deciding whether to sign is entitled to see both, to ask their own provider which of these conditions its contract actually meets — whether the asset exists and is owned, whether possession genuinely passes, whether they are free to take delivery instead of selling — and to take the question to a scholar they trust. That is a harder answer than a verdict. It is also the only honest one this corpus can give.