How Should I Purify the Wealth Earned from CFD Trading?

Answered by Shaykh Muhammad Carr

Question

How should I purify the wealth earned from CFD trading? Can it be used for charitable purposes, such as buying a house for someone or sponsoring Hajj?

Answer

In the Name of Allah, the Most Merciful and Compassionate.

Thank you for your question. May Allah reward you for ensuring that your income is permissible.

Allah says,

“O believers! Intoxicants, gambling, idols, and divining arrows are all evil of Satan’s handiwork. So shun them so you may be successful.” [Quran, 5:90]

As you pointed out, CFDs (Contracts for differences) are impermissible as you do not own the underlying asset. Mutually taking possession of the commodity and its counter-value (taqabud) does not occur in contracts for differences.

You should desist from trading in CFDs with immediate effect. The investment amount belongs to you, while the profit in its entirety must be given away to charity.

General Rule of Unlawful Funds

The general rule that applies to disposing of unlawful funds is as follows:

• Where the rightful owner is known, it must be returned to the rightful owner.
• Where the rightful owner is not known [or if they refuse], the funds must be disposed of in one of two ways: a) it must either be given towards a charitable cause that benefits the public at large, such as public hospitals, schools, or mosques; b) or it should be given in charity to a person who is entitled by his need to receive charity. [Nawawi, Majmu‘ Sharh al-Muhadhdhab; Karaan, Disposal of Riba (Fatwa issued by the MJC)]

I pray this is of benefit and Allah guides us all.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Dr. Muhammad Abu Bakr Badhib

Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door to students. As an imam, he has the unique opportunity to serve his community in daily life.

In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari‘a Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.