The short answer
AI can help Islamic financial institutions with information retrieval, document analysis, classification and identifying areas that need human attention. It should not become the authority on Shariah status. Scholars decide, and institutions remain accountable.
What the report covers
Writing in IFN's Special Report section, Mahnoor Zafar argues that asking “what can we automate?” may be the wrong starting point for Islamic finance. The report examines the risk of treating compliance as a technology problem, the shift from one-time review to continuous governance across a product's lifecycle, and the often-overlooked question of what happens after a system flags a potential concern.
It closes with a call for dialogue between scholars, technology companies, financial institutions and regulators, and for technology that strengthens governance rather than quietly replacing human judgment.
“Machines can assist. Scholars decide. Institutions remain accountable.”
Key takeaways
- Shariah compliance is not simply a document-checking exercise. It involves interpretation, context, jurisprudential reasoning and institutional responsibility.
- Identifying something unusual is not the same as determining its Shariah status. Technology can assist the process; it should not quietly become the authority.
- Modern products are not static, so Shariah governance should run across the product lifecycle rather than only at initial approval.
- Detection is only the beginning. Useful systems support what happens after a flag: scholarly assessment, correction, re-review and a governance record.
- The opportunity is not to reduce Shariah scholarship to a database, but to build better digital infrastructure around it.
Why it matters for Islamic financial institutions
The global financial system is becoming more digital, more automated and increasingly dependent on AI. Islamic financial institutions cannot remain outside that transformation, but neither should they adopt technology simply because everyone else is doing so. The report frames the real question for the next decade: how to use AI while preserving the principles, accountability and human judgment that give Islamic finance its identity.
Read the full report
Two pages from IFN Volume 23, Issue 40, dated 7 October 2026. Free PDF download, no sign-up required.
About the author
Mahnoor Zafar is the Founder and CEO of Daeson Technologies, which builds governance-first AI infrastructure for Islamic finance and real estate. She can be contacted at contact@daesontechnologies.online.
Frequently asked questions
What is the IFN report "When Shariah compliance meets AI" about?
It argues that AI should support Shariah governance without becoming the authority on it. AI can help with information retrieval, document analysis, classification and highlighting areas for human attention, while scholars retain responsibility for interpretation and determination, and institutions remain accountable for implementation and oversight.
Who wrote the report and where was it published?
The report was written by Mahnoor Zafar, Founder and CEO of Daeson Technologies. It was first published as a Special Report in IFN (Islamic Finance News) Volume 23, Issue 40, dated 7 October 2026, on pages 24 and 25.
Can AI determine whether a financial product is Shariah compliant?
According to the report, no. An AI system may identify a clause that deserves attention or compare language across documents, but identifying something unusual is not the same as determining its Shariah status. Confidence in an AI output should never be confused with scholarly validity.
What does lifecycle Shariah governance mean?
Financial products change after approval through technology, operational procedures, customer journeys, payment processes and later modifications. The report suggests Shariah governance should be considered throughout a product's lifecycle rather than only at initial approval.
What happens after an AI system flags a potential Shariah concern?
Detection is only the beginning. A scholar needs to assess the finding, the relevant team may need to make a correction, the revised material needs to be reviewed again, and the institution needs a record of what changed and why. The report argues useful technology should support that whole governance process.
Exploring AI for Shariah governance?
We work with Islamic financial institutions on technology that reduces friction without reducing responsibility. Tell us about your review process.
Talk to Daeson Technologies