Elsewhere such changes are often driven by ensuring the equality of treatment of financial contracts drafted under Shariah law (where interest, whether received or paid, is forbidden) which do not readily fit within the countries’ tax laws. Jersey’s position as a tax-neutral jurisdiction means that no such amendments are necessary. In addition, our other corporate laws and regulations are such that in over 20 years of structuring Shariah-compliant vehicles, I have yet to encounter a problem with a structure or contract that could not be accommodated within Jersey’s laws.


Historically, the two primary areas of Shariah-compliant services offered by Jersey are:

  1. a) Private wealth management services such as the establishment and administration of trusts, foundations and private companies for individuals and family groups and
  2. b) the establishment and administration of structured finance vehicles, such as collective investment funds, and other special purpose vehicles for the investment of capital on behalf of Islamic Financial Institutions (IFIs), or small groups of family and friends investors which are often referred to as ‘club deals’.

Whilst 2016 finished with a flurry of activity, particularly in investment in UK commercial real estate by both individuals and IFIs, it was our experience that 2017 started very slowly with minimal activity across all sectors as individuals and institutions were cautious as to the possible effects of the Brexit decision in the UK, with a knock-on effect over investment sentiment for European assets. The Trump effect also led to many investors from the GCC being very cautious and delaying plans for investing into assets located in the US.

It is not possible to identify a trigger event or timing when activity picked up again but we saw a steady build up in activity in the period preceding Ramadan in late May and then an unusual level of activity during Ramadan itself, which is traditionally a very quiet period with regional businesses working shorter hours. Following the annual (lengthy) summer holidays, we were inundated with enquiries and transactions from across the region and beyond, and it seemed the UK real estate had lost none of its appeal. That was until the UK Chancellor dropped his bombshell in his autumn budget with a proposal that from April 2019 capital profits on UK real estate will be subject to Capital Gains Tax (CGT).

Many experts have pointed out that such profits are already subject to taxation in other jurisdictions across Europe and, over the longer term, rental income in the UK is likely to increase to mitigate the effect of the additional tax on individual properties. As such the overall investment returns from UK real estate should prove to continue to be attractive to the overseas investors on which the UK is highly dependent. Meanwhile, we have seen an increase in interest by regional investors in European real estate, utilising Jersey corporate structures rather than European corporate vehicles.

2018 and beyond

There are no indications to suggest real estate will not continue to be the predominant asset class for Muslim investors from the GCC and elsewhere but increasingly the availability of real estate assets where the activities of the tenants are not haram, i.e. prohibited in accordance with the principles of Shariah law (e.g. non-Islamic banks or financial institutions), are becoming more difficult to find. Shariah Scholars will generally approve an element of purification (or cleansing) of rental flows arising from haram activities of the tenants but these can be difficult to ascertain with any real certainty and naturally have an adverse effect on the ultimate returns paid to the investors.

Along with this pressure on the availability of appropriate real estate assets, many IFI’s and their clients are looking to diversify their portfolio into new asset classes and it is for these asset classes that we anticipate Jersey entities playing an active role.

Green Sukuk

The worldwide trend towards socially responsible investment (SRI) and increasing environmental awareness has seen a marked rise in the appetite for green bonds and within the Islamic finance sector this is reflected in the potential for Green Sukuk, which speak to the underlying purposes of the sector in bringing good and avoiding harmful acts.

Malaysia has been the market leader in the issuance of Green Sukuk, with guidelines issued in 2014 for SRI. These set out that the proceeds of SRI Sukuk can be used to preserve the environment and natural resources, conserve the use of energy, promote the use of renewable energy and reduce greenhouse gas emissions.

Jersey has a long history in facilitating Sukuk structures, notably the Caravan Sukuk structure which won an award as the Innovative Product of the Year as long ago as 2004 and we are seeing renewed interest in establishing Sukuk structures through Jersey vehicles, particularly in the energy from waste and renewables sectors.


Jersey committed itself to working with Africa through Jersey Finance’s report ‘Jersey’s Value to Africa – The role for international financial centres in delivering sustainable growth in developing countries’ published in November2014.

Many African countries have a large Muslim population but conversely have only a small and relatively informal Islamic finance sector and therefore have the potential to grow in scale and sophistication. Yet equally economic growth and financial participation will be critical which gives investment opportunities for both residents and foreign IFI’s and individuals alike.

Islamic financial solutions to support both inward and outward investment will be a key part of realising the investment opportunities in Africa and Jersey is well placed to play its part in assisting with these solutions.


The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), which sets Shariah standards followed in whole or in part by IFI’s around the world, approved a new standard in December 2016 setting out the Shariah parameters for trading in gold, the approved types and forms of gold and the Shariah rulings for gold-based financial products. Prior to this there had been a degree of uncertainty as to permissibility of gold as an investment product as it had been closely associated with money which cannot be traded or held as an investment.

However, the anticipated flurry of new gold based, Shariah-compliant investment structures has not materialised which may be a reflection of the volatility of gold bullion in 2017, or slow acceptance of investors of the new Standard (or both); but this is an area which deserves to be monitored in the future.


And finally fintech, or for the purposes of this article, Islamic fintech. The government of Jersey has identified fintech as a potential new industry sector for the Island and the first regulated bitcoin fund was given regulatory approval in 2014. However whilst the Scholars have yet to issue conclusive guidance on whether investing in bitcoin and other synthetic currencies is halal or haram, fintech is a much wider topic and encompasses all technology that is used to give greater access to financial products for all investors.

Equality of individuals is a fundamental precept of Islam and fintech will assist in achieving this in financial services, so whilst the exact role (or roles) of Jersey in delivering Islamic fintech remain uncertain, you can be certain that Jersey will be playing a role in this sector in the near future.


As noted in my introduction, Muslims have been establishing structures in Jersey for several decades, either for private wealth purposes or the issuance of securities. The rationale for this is similar to that for any other group or nationality but Jersey’s long-standing connections to the Middle East bring an additional benefit of experience and expertise in establishing these structures in a Shariah-compliant context, both now and for the future.

Trevor Norman, Director, VG.

Trevor Norman has more than 20 years’ experience working on Shariah-compliant structures including several real estate funds, various specialist Shariah screened equity funds and the award-winning Caravan I securitisation Sukuk. A recognised expert in the field, VG has been named Best Islamic Trust Formation Services at the Global Islamic Finance Awards two years in a row (2016 and 2017).

The author of several definitive articles on Islamic finance, Trevor is a regular speaker on the subject at international conferences.

Trevor is a Fellow of The Institute of Chartered Accountants in England and Wales and a member of the Society of Trust and Estate Practitioners (STEP) and the Institute of Directors.

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