This article explores the legal framework for Islamic financial institutions in Muslim-majority countries. Financial activities involving individuals or legal entities, and based on the principles of Islamic finance, must be carried out in strict compliance with Islamic legal norms and approaches. However, not every state where Islamic financial institutions operate alongside with the traditional banks has fully integrated the legal system of Islam. In this regard, the experiences of the following countries is of particular interest: in Iran, the financial system is 100 per cent Sharia-based, it is a state where religious law prevails; in Malaysia, Islamic banking makes up only 35 per cent of the industry, its judicial system consists of both Civil and Sharia courts; and in Türkiye, even though it is officially secular and the share of Islamic banking is small (8.7 per cent), 90 per cent of the population is Muslim and can potentially use Islamic banking products and services. Furthermore, a well-developed legal framework is the first step towards the fully-functioning Islamic financial institutions in a multipolar world, including the use of local currencies and Islamic financial instruments in cross-border transactions.
Islamic financial institutions; Global South; Muslim population; Islamic law; Sharia; legal systems; banking law.