Islamic banking and finance in Canada

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The demand for Islamic banking and finance has grown in Canada due to the growing Muslim population[1] in the country who want to avoid riba and other financial practices in violation of sharia. These sharia-compliant financial products are not offered by main financial institutions and, thus, small financial companies are major players. However, major companies like WealthSimple are starting to embrace the idea.[2]A growing number of Canadian fintech firms now offer Shariah-compliant home-financing models based on co-ownership (diminishing partnership) rather than conventional interest-bearing mortgages.[3]

Islamic Mortgage

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History

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A Toronto-based financial company UM Financial started giving Sharia-compliant loans to Muslims in 2005 in partnership with Central 1 Credit Union of Vancouver. The company planned to offer no-interest MasterCard as well.[4] UM financial was ordered to go into receivership by the Ontario Superior Court on October 7, 2011.[5] Omar Kalair and Yusuf Panchbaya of UM Financial were charged by RCMP for $4.3-million mortgage fraud, but both men were acquitted of all counts contained in the indictment in Ontario Superior Court June 7, 2019.[6]

Islamic Mortgage in the main stream

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The 2024 federal budget announced on April 16 included plans to bring halal mortgages into financial regulatory system.[7]

Islamic financial products

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Mortgage products

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Comparison of Islamic Mortgage Products
Company Islamic model Year of Inception Funder Funding from Banks/ Credit Unions Serving province Sharia Standards Sharia Certification External Review Website
IjaraCDC Canada Ijarah-wa-Iqtina 2008 Yes AMJA [8] Ebrahim Desai[9] [1]
Aya Financial Diminishing

Musharakah

Yes Ontario Ebrahim Desai[10] [2]
Zero Mortgage Diminishing

Musharakah

Yes Ebrahim Desai[11] [3]
Manzil Murabaha 2019 Manzil Mortgage Fund No Ontario AAOIFI (disputed [12]) Ebrahim Desai[13] [4]
Manzil DiminishingMusharakah 2019 Manzil Mortgage Fund No AAOIFI Ebrahim Desai[14] [5]
Eqraz Murabaha 2022

Alberta
British Columbia
Manitoba
New Brunswick
Newfoundland and Labrador
Nova Scotia
Ontario
Prince Edward Island
Quebec
Saskatchewan

 AAOIFI (disputed [15]) Fatwa.ca [16] [6]
Canadian Halal Finance Corporation Murabaha

Diminishing

Musharakah

2021 Alberta [7]
Halal Homes Murabaha

Diminishing

Musharakah

Alberta [8]
Murabaha Homes Murabaha [9][permanent dead link]
An-Nur Co-operative Co-operative [10] Archived 2021-04-10 at the Wayback Machine
Ansar Co-operative Diminishing

Musharakah

1980 Co-operative Ontario Ebrahim Desai[17][18][19] [11]
Interest-Free Housing (Formerly ISNA Housing) 2008 Co-operative [12]
Al Ehsaan Housing Diminishing

Musharakah

2007 Co-operative Saskatchewan [13]
Qurtuba Housing Coop Diminishing

Musharakah

1990 Co-operative Quebec [14]
Assiniboine Credit Union Diminishing

Musharakah

Credit Union Yes Manitoba [15] Archived 2021-10-31 at the Wayback Machine

Investment products

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Comparison of Investment Products
Product Type First year of offering Company Available through MER Sharia Certification Website
Wealthsimple Shariah World Equity Index ETF (WSHR) Exchange-traded fund (ETF) 2020 WealthSimple gold ETF 0.18%, equity ETF 0.5% [20] Ratings Intelligence [21] [16] Archived 2024-06-15 at the Wayback Machine
Wahed FTSE USA Shariah ETF (HLAL) Exchange-traded fund (ETF) 2019 Wahed Invest 0.5% [22] [17]
The SP Funds S&P 500 Sharia Industry Exclusions ETF (SPUS) Exchange-traded fund (ETF) 2019 SP Funds 0.49% [18]
SP Funds Dow Jones Global Sukuk ETF (SPSK) Exchange-traded fund (ETF) SP Funds [19]
The SP Funds S&P Global REIT Sharia ETF (SPRE) Exchange-traded fund (ETF) SP Funds [20]
Global Iman Fund (IMANX) Mutual Fund 2008 Global Growth Assets [21]
Manzil Mortgage Fund (MANZL) Mortgage Fund 2019 Manzil Manzil/ CI Direct 1.5% [23] [22]
Sukak - Term Deposit Mortgage Fund 2019 AYA Financial Moya Financial [23]

Roboadvisors/Investments Managers

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Some institutions have started offering accounts including Registered Education Savings Plan (RESP), Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA) etc.

Comparison of Islamic Investment Service Providers
Company First Year of Offering Fees Minimum Investment External Review Website
Manzil (through CI Direct) 2019 0.6% [24]
Assad Wealth Management at IG Wealth Management 2004 0.6% to 1.35% $50,000 [25]
ShariaPortfolio 2020 0.5 to 2% [26]
Wealthsimple Invest 2021 0.4 to 0.5% No minimum [27]
Global Growth Assets 2008 Global News [24] [28]
Canadian Islamic Wealth [29]

See also

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References

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  1. ^ Hejazi, Walid; Sawwaf, Mohamad (2020-04-15). "Opinion: Embracing Islamic finance presents an opportunity for Canada". The Globe and Mail. Archived from the original on 2021-11-05. Retrieved 2021-11-05.
  2. ^ "Mackenzie Investments Partners with Wealthsimple to Launch Canada's First Shariah-Compliant ETF". Bloomberg.com (Press release). Canada Newswire. 12 May 2021. Archived from the original on 2021-10-31. Retrieved 2021-10-31.
  3. ^ "Tjara Halal Finance – Shariah-compliant home financing". Tjara Halal Finance. Retrieved 2025-10-20.
  4. ^ Mathieu, Emily (12 April 2010). "No-interest MasterCard aims at devout Muslims". Toronto Star. ISSN 0319-0781. Archived from the original on 2021-11-05. Retrieved 2021-11-05.
  5. ^ "Islamic mortgage lender's woes leave clients in lurch". CBC News. 20 October 2011. Archived from the original on 5 November 2021. Retrieved Nov 4, 2021.
  6. ^ Ha, Tu Thanh (2014-02-19). "RCMP charge missing Toronto financier with $4.3-million mortgage fraud". The Globe and Mail. Archived from the original on 2021-10-31. Retrieved 2021-10-31.
  7. ^ Takagi, Andy (2024-04-20). "What is a halal mortgage? Here's what you need to know about why Canada is considering them". Toronto Star. Retrieved 2024-05-05.
  8. ^ "AMJA Resident Fatwa Committee resolution about Islamic Home Financing Companies in the US. | AMJA Online". Archived from the original on 2021-11-30. Retrieved 2021-11-30.
  9. ^ "Fatwas by Mufti Ebrahim Desai » Askimam". Askimam. Archived from the original on 2021-10-31. Retrieved 2021-10-31.
  10. ^ "Fatwas by Mufti Ebrahim Desai » Askimam". askimam.org. Archived from the original on 2021-10-31. Retrieved 2021-10-31.
  11. ^ "Fatwas by Mufti Ebrahim Desai » Askimam". askimam.org. Archived from the original on 2021-10-31. Retrieved 2021-10-31.
  12. ^ explorer2728 (2021-12-18). "Manzil Murabahah Mortgage - Canada". r/HalalMortgageReviews. Retrieved 2025-01-06.{{cite web}}: CS1 maint: numeric names: authors list (link)
  13. ^ "Fatwas by Mufti Ebrahim Desai » Askimam". askimam.org. Archived from the original on 2021-10-31. Retrieved 2021-10-31.
  14. ^ "Fatwas by Mufti Ebrahim Desai » Askimam". askimam.org. Retrieved 2024-05-05.
  15. ^ explorer2728 (2022-01-17). "EQRAZ - Tawarruq Mortgage - Canada". r/HalalMortgageReviews. Retrieved 2025-01-06.{{cite web}}: CS1 maint: numeric names: authors list (link)
  16. ^ "Home Mortgage Situation in Canada and Islamic Finance Companies". Fatwa.ca. 2023-01-18. Retrieved 2025-01-06.
  17. ^ "Fatwas by Mufti Ebrahim Desai » Askimam". askimam.org. Archived from the original on 2021-10-31. Retrieved 2021-10-31.
  18. ^ "Fatwas by Mufti Ebrahim Desai » Askimam". askimam.org. Archived from the original on 2021-10-31. Retrieved 2021-10-31.
  19. ^ "Fatwas by Mufti Ebrahim Desai » Askimam". askimam.org. Archived from the original on 2021-10-31. Retrieved 2021-10-31.
  20. ^ "Halal Investing". Wealthsimple. Archived from the original on 2021-11-08. Retrieved 2021-11-08.
  21. ^ Ratings Intelligence. "Shari'a Control Committee, Certificate of Sharia – Audit" (PDF). Wealthsimple. Archived (PDF) from the original on 16 July 2023. Retrieved 12 October 2023.
  22. ^ WealthBar Financial Services. "Online Wealth Management". CI Direct Investing. CI Direct Investing. Archived from the original on 2021-11-08. Retrieved 2021-11-08.
  23. ^ WealthBar Financial Services. "Online Wealth Management". CI Direct Investing. CI Direct Investing. Archived from the original on 2021-11-08. Retrieved 2021-11-07.
  24. ^ O'Shea, Sean (26 November 2020). "RESP customers complain about delays accessing money". Global News. Archived from the original on 2021-11-07. Retrieved 2021-11-07.
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