Building Iraq’s Takaful Regime:

Lessons from Comparative Practice and the Objectives of Islamic Law

Alaa Basil Baqer Alfadhel

Asma Hakimah Ab Halim

 

Abstract: This note examines the concept and regulatory development of Takaful in Iraq, contextualised through comparative analysis with Bahrain, Malaysia, Nigeria, and Sudan, jurisdictions where Takaful has seen more advanced implementation. The note employs doctrinal legal analysis, drawing on statutory materials and secondary literature, to identify the structural and legal frameworks that shape Takaful regulation. Particular focus is given to the implications of the proposed Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) Sharia Standard No. 62, which mandates authentic risk-sharing and asset ownership transfer in sukuk (Islamic bonds). While intended to enhance Sharia compliance and promote standardisation, this reform introduces challenges, including increased legal complexity, transaction costs, and potential market fragmentation. By analysing regulatory trajectories across the five jurisdictions, the note identifies both opportunities and constraints in adapting Takaful to contemporary Islamic finance frameworks. The Iraqi context, still in the early stages of Takaful development, presents unique legal and institutional challenges that demand tailored regulatory responses. The study concludes with policy recommendations designed to foster a coherent legal environment that supports compliance with Islamic principles while promoting financial stability and sectoral growth.