Upon the establishment of the IILM, the Governing Board came to an agreement that the IILM will be hosted by Malaysia and headquartered in Kuala Lumpur. The Governing Board (GB) may decide to establish offices of the IILM in any other countries. However, Malaysia was an optimal choice as it is one of the leading Islamic finance hubs in the world, which has a comprehensive Islamic financial system with a robust business-driven regulatory regime and legal framework.

As an international organisation, the IILM enjoys a range of privileges and immunities conferred in the International Islamic Liquidity Management Corporation Act 2011 that the Parliament of Malaysia promulgated on 24 January 2011. Such privileges and immunities include, among others, the exemption from duties and taxes including capital gain tax to the IILM.

The IILM is listed in the book of the Malaysian Ministry of Foreign Affairs of Diplomatic Missions and International Organisations and is governed by its Articles of Agreement which was adopted on 25 October 2010.