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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]

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.[3] UM financial was ordered to go into receivership by the Ontario Superior Court on October 7, 2011.[4] 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.[5]

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.[6]

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 [7] Ebrahim Desai[8] [1]
Aya Financial Diminishing

Musharakah

Yes Ontario Ebrahim Desai[9] [2]
Zero Mortgage Diminishing

Musharakah

Yes Ebrahim Desai[10] [3]
Manzil Murabaha 2019 Manzil Mortgage Fund No Ontario AAOIFI Ebrahim Desai[11] [4]
Manzil DiminishingMusharakah 2019 Manzil Mortgage Fund No AAOIFI Ebrahim Desai[12] [5]
Eqraz Murabaha 2022 All provinces except Quebec AAOIFI [6]
Canadian Halal Finance Corporation Murabaha

Diminishing

Musharakah

2021 Alberta [7]
Halal Homes Murabaha

Diminishing

Musharakah

Alberta [8]
Murabaha Homes Murabaha [9]
An-Nur Co-operative Co-operative [10]
Ansar Co-operative Diminishing

Musharakah

1980 Co-operative Ontario Ebrahim Desai[13][14][15] [11]
Interest-Free Housing (Formerly ISNA Housing) 2008 Co-operative [12]
Al Ehsaan Housing Diminishing

Musharakah

Co-operative Saskatchewan [13]
Qurtuba Housing Coop Diminishing

Musharakah

Co-operative Quebec [14]
Assiniboine Credit Union Diminishing

Musharakah

Credit Union Yes Manitoba [15]

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% [16] Ratings Intelligence [17] [16]
Wahed FTSE USA Shariah ETF (HLAL) Exchange-traded fund (ETF) 2019 Wahed Invest 0.5% [18] [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% [19] [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 mimimum [27]
Global Growth Assets 2008 Global News [20] [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. ^ 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.
  4. ^ "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.
  5. ^ 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.
  6. ^ 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.
  7. ^ "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.
  8. ^ "Fatwas by Mufti Ebrahim Desai » Askimam". Askimam. Archived from the original on 2021-10-31. Retrieved 2021-10-31.
  9. ^ "Fatwas by Mufti Ebrahim Desai » Askimam". askimam.org. 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. ^ "Fatwas by Mufti Ebrahim Desai » Askimam". askimam.org. Retrieved 2024-05-05.
  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. Archived from the original on 2021-10-31. Retrieved 2021-10-31.
  15. ^ "Fatwas by Mufti Ebrahim Desai » Askimam". askimam.org. Archived from the original on 2021-10-31. Retrieved 2021-10-31.
  16. ^ "Halal Investing". Wealthsimple. Archived from the original on 2021-11-08. Retrieved 2021-11-08.
  17. ^ 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.
  18. ^ WealthBar Financial Services. "Online Wealth Management". CI Direct Investing. Archived from the original on 2021-11-08. Retrieved 2021-11-08.
  19. ^ WealthBar Financial Services. "Online Wealth Management". CI Direct Investing. Archived from the original on 2021-11-08. Retrieved 2021-11-07.
  20. ^ 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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