AAOIFI Screening API: Methodology & Data Fields

When you embed a Shariah verdict in your product, your users and your Shariah board will eventually ask the obvious question: how was this decided? An AAOIFI screening API answers that by making the methodology explicit and returning the data behind every verdict. This guide breaks down the three-phase methodology the Akinda Halal API implements, the thresholds it applies, the data fields you get back, and how AAOIFI-based screening differs from the index methodologies you may have seen elsewhere, so you can build features your compliance team can actually audit.

Table of Contents

• What is AAOIFI screening?
• The three-phase methodology
• What data fields the API returns
• Why the 12-quarter average matters
• How AAOIFI compares to index methodologies
• Governance and auditability

What is AAOIFI screening?

AAOIFI, the Accounting and Auditing Organization for Islamic Financial Institutions, sets the most widely used standards in Islamic finance. Its Standard No. 21 defines how to screen shares for Shariah compliance: first by what the company does, then by its financial ratios. An AAOIFI screening API encodes those rules so your software can apply them consistently to any ticker, at scale. Automated tools now screen compliance across 12,000+ listed global equities, work that would be impossible to do by hand, but the value depends entirely on the methodology being sound and transparent. For a plain-language primer you can share with users, see Akinda's explainer on AAOIFI screening.

The three-phase methodology

The Akinda API runs the screen in three phases, published in full so you can audit each step. A stock must clear all three to be marked compliant.

1. Business-activity screen

First, the company's core business must be permissible. Companies whose primary revenue comes from prohibited activities fail here regardless of how healthy their balance sheet looks. The classic excluded sectors are:

• Conventional finance (interest-based banking, insurance, and lending), because it runs on riba.
• Alcohol, tobacco, and pork production and distribution.
• Gambling and betting (maysir).
• Adult entertainment and other clearly impermissible content.
• Weapons tied to non-permissible use.

Screening also looks at incidental income: a company that mostly does something permissible but earns a small share of revenue from a prohibited source may still pass, provided that share stays below a low tolerance. That tolerance is why the business screen isn't simply a keyword filter, it's a revenue-composition test.

2. Financial-ratio screen

Companies that pass the business screen then face two financial tests. Both are measured against 30% of the average 12-quarter market capitalisation, a smoothed denominator that avoids single-day price swings flipping a verdict.

• Debt ratio: interest-bearing debt is measured against the threshold, a company financed largely by conventional, interest-bearing borrowing fails.
• Liquidity ratio: interest-bearing investments and liquid assets are measured against the threshold, capturing exposure to riba on the asset side of the balance sheet.

Both ratios must stay within the limit. The logic is that a permissible business shouldn't be so entangled with interest-based finance that owning its shares effectively means participating in riba.

3. Purification

Even a compliant company may earn a small amount of incidental impermissible income, for example, interest on cash balances. Purification quantifies the portion of dividends attributable to that income so a shareholder can give it to charity rather than keep it. The API surfaces this figure so your app can turn compliance into an actionable number, telling users exactly how much to cleanse rather than leaving them to estimate.

What data fields the API returns

Rather than a bare pass/fail, the API surfaces the data behind the verdict so it's auditable. Conceptually, you get:

The exact field names, types, and which fields appear on which endpoint are defined in the developer docs; the full-report endpoint exposes the complete set, including the ratios and purification data, while the compliance endpoint returns just the verdict for speed.

Why the 12-quarter average matters

The choice of denominator is where screening methodologies quietly differ, and it matters for your users. Measuring ratios against a single day's market cap makes verdicts jumpy: a sharp price move can flip a stock in or out of compliance overnight, even though nothing about the underlying business changed. Averaging market cap over 12 quarters smooths that noise, producing more stable, defensible verdicts and fewer whipsaw alerts for your users.

When you evaluate any AAOIFI screening API, check what denominator it uses, because two APIs applying “the same” 30% rule to different denominators can legitimately disagree on the same stock. A published denominator is a sign the provider has thought about verdict stability, not just the headline threshold.

How AAOIFI compares to index methodologies

AAOIFI is not the only Shariah screening framework. Index providers, Dow Jones Islamic Market, S&P Shariah, FTSE, and MSCI Islamic, each publish their own rules, and they differ in two key ways that explain why screeners sometimes disagree on the same company:

• The denominator. Some methodologies measure financial ratios against market capitalisation (as the Akinda API does, averaged over 12 quarters); others use total assets. A company can pass under one and fail under the other purely because of the base.
• The thresholds. The exact percentage limits for debt and interest-bearing assets vary between frameworks, so a borderline company can land on either side depending on which ruleset you apply.

None of this makes one framework “right” and another “wrong”, they encode legitimate scholarly differences. What matters for your product is picking a transparent, consistently-applied methodology and being clear with users about which one your verdicts reflect. Because the Akinda API is explicitly AAOIFI-based and publishes its rules, you can tell users exactly what standard they're seeing.

Governance and auditability

A methodology is only trustworthy if it's transparent and governed. The lack of standardised Shariah interpretation across jurisdictions is one of the industry's biggest challenges, which is exactly why published rules matter. The Akinda API publishes its full screen, both ratio formulas and the purification rule, so your integrators and their own Shariah boards can audit the math rather than trust a black box. The rules are overseen by Dr. Muhammad Nazir Khan, who holds a PhD in Islamic Economics and Finance and an AAOIFI Shari'ah Auditing Certification, and who reviews edge cases such as mergers, purification, and partial-period reporting.

That combination, published rules plus scholar oversight, is what lets you defend a verdict to a regulator, a user, or a Shariah committee. It's also what separates a screening API you can build a regulated product on from a data feed you can't.

Frequently asked questions

Is the Akinda API's screening AAOIFI-certified?

The methodology is AAOIFI-based and overseen by a scholar with an AAOIFI Shari'ah Auditing Certification, and it's published in full so it can be audited against AAOIFI Standard 21. As with any automated screen, treat the output as data-driven signals rather than a fatwa, and keep your own Shariah governance in the loop for final rulings.

What financial ratios does the API check?

Two: a debt ratio (interest-bearing debt) and a liquidity ratio (interest-bearing investments and liquid assets), each measured against 30% of the average 12-quarter market capitalisation. Companies must pass both, after clearing the business-activity screen, to be marked compliant. The exact formulas are in the published methodology.

What business activities cause a stock to fail?

Companies whose core revenue comes from conventional finance, alcohol, tobacco, pork, gambling, adult content, or weapons tied to non-permissible use fail the business screen. A company earning only a small, incidental share of revenue from an impermissible source may still pass if that share stays under the methodology's tolerance, which is why it's a revenue-composition test, not a simple keyword filter.

Does the API provide purification amounts?

Yes. The methodology includes a purification rule, and the full-report endpoint surfaces purification data so your app can tell users how much of their dividend income to give to charity. Review the exact fields in the developer docs and confirm the treatment with your Shariah board before displaying figures to users.

Why do two Shariah screeners sometimes disagree?

Because they can use different denominators, thresholds, or data. Two APIs applying a 30% rule will still differ if one measures against a single-day market cap and another against a 12-quarter average, or if one uses market cap and another total assets. That's why a transparent, published methodology matters: it lets you see exactly why a verdict came out the way it did.

Sources

AAOIFI Shari'ah Standard No. 21: Financial Paper (Shares and Bonds) – the standard the Akinda API's screening methodology is built around.

Akinda API screening methodology – the full three-phase screen, ratio formulas, and purification rule, published for integrators to audit.

Akinda API Shariah advisor – the scholar governance behind the API's halal verdicts.

Grand View Research – Islamic Fintech Market Report – Islamic fintech market size and CAGR.

Disclaimer

This article is about a software product and is for general information only. It is not financial or religious advice. Automated Shariah screening produces data-driven signals, not a fatwa; integrators should pair it with their own Shariah governance and consult qualified scholars. API features, endpoints, coverage, and pricing change over time, so verify current details on b2b.akinda.io before building.