Islamic finance is governed by Islamic law (shari'ah) and the sources of the Quran and Sunnah. Islamic finance is the financial framework that includes activities under Islamic law known as the Shariah principle. In Islamic law, any activity involved must be prohibited by riba. Riba means extra or excess interest in the payment made by the buyer or customer to the seller or bank. In addition to riba, Shariah law also prohibits any transactions that contain gharar (uncertainty) and maysir (gambling). In Islam, any business must be clear and based on the Quran. For example, Islam prohibits investing business in illegal and haram-type activities in the production of media such as gossip columns that are contrary to Islamic values. The sources of Shariah law come from the Quran, Sunnah, Ijmaa' and Qiyas. The Quran refers to the words of Allah revealed to Prophet Muhammad as Ijmaa' is the opinion and agreement between Muslim jurists while Qiyas is the application and extension of the law established by the binding authority to a particular case and compare a new case with the divine text with the same and common effective cause (illahi). Islamic finance can also be classified into three sections: faith and belief, practice and activity, morality and ethics. Under practice and activities, it can be divided into two: ibadat (relationship with God) and mu'amalat (relationship with other humans). In mu'amalat, one separates oneself from political, economic and social activities. HISTORY OF ISLAMIC FINANCE The first effort of Islamic finance dates back to the 1960s. In 1963, the local savings bank Mit Ghamr was founded in Egypt. The operation is based on the German Savings Bank. The aim of the bank is to mobilize the idle savings of Musl...... middle of paper ......collect a profit from the customer which can be calculated on the basis of the gross profit is allowed. In current practice in the Islamic financial system, the gross profit between institution and client was calculated by deducting the profit of the entire operation and investment income from direct expenses. After obtaining the value, the institution will provide the actual value to the customer. Based on the SAC meeting, they conclude that the method is permissible. It is because the institution aims to safeguard the customer as a depositor and investor in their institution. In the musyarakah contract, all partners agreed on the proportion of gross profit to net profit. But in the case of the mudharabah, the majority consultants agreed that the mudarib must be responsible for bearing the entire operational cost, including indirect costs. Therefore, the gross profit distribution method must meet the need.