Islamic finance is based on shariah , an Arabic term that often is translated to "Islamic law." Shariah provides guidelines for aspects of Muslim life, including religion, politics, economics, banking, business, and law. Shariah -compliant financing (SCF) constitutes financial practices that conform to Islamic law. SCF institutions are similar to conventional financial intermediaries in that they are profit-maximizing institutions and offer traditional banking services, but differ in some of the principles under which they operate. Research from the International Monetary Fund (IMF) indicates that Islamic banking appears to be a complement to conventional banks, rather than a substitute. Major principles of shariah that are applicable to finance and that differ from conventional finance are: Ban on interest ( riba ): In conventional forms of finance, a distinction is made between acceptable interest and usurious interest (i.e., excessive rates of interest). In contrast, under Islamic law, interest is considered to be usurious and is prohibited. Some question how lenders profit from financial transactions under Islamic law. For instance, in a real estate setting, SCF takes the form of leasing, as opposed to loans. Instead of loaning money to a prospective purchaser, the bank obtains the property and leases it to the shariah -compliant investor, who pays rent instead of interest. Ban on uncertainty: Uncertainty in contractual terms and conditions is prohibited, unless all of the terms and conditions of the risk are clearly understood by all parties to a financial transaction. Risk-sharing and profit-sharing: Parties involved in a financial transaction must share both the associated risks and profits. Earnings of profits or returns from assets are permitted so long as the business risks are shared by the lender and borrower. Ethical investments that enhance society: Investment in industries that are prohibited by the Qur ' an , such as alcohol, pornography, gambling, and pork-based products, is discouraged. Asset-backing: Each financial transaction must be tied to a "tangible, identifiable underlying asset," such as real estate or commodities. Under shariah , money is not considered an asset class because it is not tangible and thus, may not earn a return. Financial institutions seeking to offer shariah -compliant products typically have a shariah supervisory board (or at a minimum, a shariah counselor). The shariah board is to review and approve financial practices and activities for compliance with Islamic principles. Such expertise raises the attractiveness of shariah -compliant financial intermediaries to investors considering Islamic banking. International institutions have been established to promote international consistency in Islamic finance. The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), founded in 1991 and located in Bahrain, issues international standards on accounting, auditing, and corporate governance. It has 200 members from 45 countries; its membership includes central banks, Islamic financial institutions, and other bodies in the Islamic banking and finance industry. Another regulatory body is the Islamic Financial Services Boards (IFSB), which began operations in 2003 and is based in Malaysia. IFSB puts forth standards for supervision and regulation. Many leading Islamic financial centers around the world have adopted international SCF regulation standards. U.S. federal banking regulators have provided some formal guidance about Islamic products. The Office of the Comptroller of the Currency (OCC) issued two directives concerning shariah -compliant mortgage products. In 1997, the OCC issued guidance about ijara ("lease"), a financial structure in which the financial intermediary purchases and subsequently leases an asset to a consumer for a fee. In 1999, the OCC recognized murabaha ("cost-plus"), under which the financial intermediary buys an asset for a customer with the understanding that the customer will buy the asset back for a higher fee. Standardization of Islamic finance regulations has been of increasing interest in the industry. Shariah is open to interpretation and Islamic scholars are not in complete agreement regarding what constitutes SCF. Islamic finance laws and regulatory practices vary across countries. The lack of concurrent viewpoints makes it difficult to standardize Islamic financing. Standardization also may be challenging because the maturity of Islamic finance markets varies from country to country, with some markets well-established and others that are more nascent. Without standardization, some industry officials express concern that shariah -compliance risk may grow. The lack of standardization across Islamic finance markets raises legal uncertainty that a contract will not be recognized as valid under Islamic law by all Islamic scholars. This uncertainty has been highlighted by a recent dispute between Lebanon's Blom Bank and Kuwait's Islamic firm Investment Dar over whether or not a contract between the two entities was compliant with Islamic principles and if payment should be made. Many observers view standardization of SCF regulations as important in increasing the marketability and acceptance of Islamic products. Over the years, there have been numerous initiatives to improve regulatory practices. For example, in 2009, the IFSB published guiding principals on issues such as governance and capital adequacy requirements for various financial products. The AAOIFI is in the process of developing new standards in risk management and corporate governance. Estimates vary of the size and growth rates of assets held internationally under Islamic finance, but suggest that Islamic finance is a rapidly growing industry. While it represents a small proportion of the global finance market (estimated at 1%-5% of global share), the Islamic finance industry has experienced double-digit rates of growth annually in recent years (estimated at 10%-20% annual growth). Industry experts estimate that assets held under Islamic finance management doubled between 2007 and 2010 to reach around $1 trillion. A survey of the top 500 Islamic financial institutions shows that shariah -compliant assets in these institutions rose from $822 billion in 2009 to $895 billion in 2010. In 2010, 18 new banks offering SCF entered the market and six conventional banks started providing SCF via "Islamic finance windows." Internationally, Islamic banks appear to have been more resilient to the primary effects of the global economic turndown and international financial crisis than conventional banks. They tend to avoid the speculative investments, such as derivatives, that many analysts believe led to the financial crisis affecting conventional banks. For some observers, Islamic finance serves as a vehicle for recovering from the international financial crisis. The Islamic banking industry may be able to strengthen its position in the international market as investors and companies seek alternate sources of financing. However, as Islamic banks operate within a global financial system, they have not been completely insulated from the recent economic and financial shocks. For instance, on the one hand, the Islamic financial industry is considered by many to be less risky because financial transactions are backed by physical assets. On the other hand, Islamic banks may be more vulnerable to fluctuations in the mortgage market, given their high activity in the real estate sector compared to conventional banks. The recent slowdown in real estate activity in the Gulf economies raises concerns about some Islamic banks' financial positions. Modern Islamic finance has existed since the 1970s. Traditionally concentrated in Muslim-majority countries in the Middle East and Asia, in recent years, Islamic finance has expanded to other countries with smaller Muslim populations. The geographical expansion of Islamic finance can be attributed to a number of factors. Muslims represent about a quarter of the world's population, and there is greater awareness of and demand for Islamic-based financial products by Muslim consumers. Among non-Muslim businesses and investors, there also is growing interest in Islamic finance. Some consider the principles of Islamic finance to be prudent and risk-mitigating, while others are looking to diversify their portfolios or to raise new sources of capital. In the traditional centers of Islamic finance in the Middle East and Asia, Islamic finance activities may be accelerating due to growing oil liquidity and the need for investment in development projects. Countries without large Muslim populations also may be interested in Islamic finance in order to attract new sources of capital or to facilitate trade and investment with Muslim-majority countries. The Middle East continues to be the primary geographic center for shariah -compliant financing. By some estimates, Iran accounts for about 40% of total global assets in Islamic finance. However, according to some analysts, the reach of Iran's Islamic finance market may be limited because of international sanctions. Elsewhere in the Middle East, major Islamic finance markets are Bahrain, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates (UAE). More recently, Asia has emerged as the second-largest hub for Islamic finance. Malaysia, a regional leader in Islamic finance, boasts more than half of the global share of Islamic capital market securities. In recent years, Islamic finance has become an increasingly visible form of banking in other parts of the world. Outside of the Middle East and Asia, the United Kingdom, which has a sizeable Muslim population, often is viewed as the largest Islamic financial center. In August 2004, the United Kingdom's Financial Services Authority (FSA) approved a banking license for the Islamic Bank of Britain (IBB), the country's first Islamic bank to serve the consumer market with shariah -compliant products. In March 2006, the FSA licensed the European Islamic Investment Bank as the United Kingdom's first independent bank for shariah -compliant investments. Other countries that have made inroads into Islamic finance in recent years include sub-Saharan African countries, Indonesia, and Thailand. A number of countries are revising their tax, legal, and regulatory frameworks to attract Islamic finance. For example, several countries that want to foster an Islamic financial market are working to address issues in the taxation of Islamic products. The goal is "to create a level playing field with the tax treatment of equivalent conventional products." European countries working to amend their laws to allow or attract Islamic finance include France and Ireland. Countries in Asia that are doing so include Japan, South Korea, Hong Kong, Singapore, and Thailand. Australia also is engaged in such efforts.