From Shariah Compliance to Maqasid-Based Trust: Artificial Intelligence Adoption, Risks, and Governance in Islamic Finance

Abstract

Artificial intelligence is changing finance by automating credit scoring, detecting fraud, providing robo‑advisory, running chatbots, and performing Shariah screening, yet the governance of artificial intelligence remains stuck in a narrow product‑level idea of Shariah compliance. This narrow idea is urgent to fix because algorithmic bias, lack of clarity, privacy intrusion, and unclear accountability can produce outcomes that are formally acceptable but actually unfair, eroding the trust that Islamic financial institutions depend on. I set out to combine what is currently known about how artificial intelligence is used in Islamic finance, the ethical and Shariah risks that artificial intelligence creates, and the governance tools that can align artificial intelligence with Maqasid al‑shariah. I carried out a systematic literature review, thematically synthesizing 32 sources that were mainly peer‑reviewed articles indexed in Scopus or Web of Science and published from 2021 to 2026, and adding conceptual and empirical works on Shariah‑compliant fintech and Islamic AI ethics. The results show three themes: first, artificial intelligence enhances Shariah screening, transparency, risk management, and financial inclusion, but surveys show weaker effects on operational efficiency; second, five risk areas appear—algorithmic injustice, opacity, privacy and data security, accountability gaps, and the shortage of structured Shariah data; third, governance responses are split between Shariah supervisory boards and technical AI risk frameworks. Because of these findings, I propose an AI Trust Framework that connects tawhid, ‘adl, amanah, and Ihsan to controls throughout the artificial intelligence life cycle and to ongoing AI‑Shariah audit. I conclude that Shariah compliance should be the requirement rather than the final goal of artificial intelligence governance and that institutions and regulators must build joint Shariah‑technology capacity. The study also examines AI challenges.