Assalaamu alaykum Shaykh. I am Sri Lankan, I would like to know the Islamic ruling on black market money exchange and whether it is permissible. For example, my country allows US$ 5,000 to be taken by a person going out of the country without declaring it. If one takes more, then the exceeding amount requires the approval of the concerned autority. I need to go to India for medical treatment, which will cost me about US$ 15,000 which means that I have to get the approval for the exceeding US$ 10,000, which takes time. Can I give the required amount that I need for my purpose to a black market money exchanger in Sri Lanka and receive the amount in India from the money exchanger's agent in India after my arrival there, two or three days later, or should the giving and receiving take place at the same time? I do not know anyone trustworthy who can receive the money there. I would also like to know if money exchange can be done on credit, that is, receive an amount in another country and pay the agreed amount in my country on a delayed date, meaning one to two weeks later. Please give a detailed answer. May Allaah reward you.

All perfect praise be to Allah, The Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad is His slave and Messenger.

It is a condition for the validity of the exchange that the sale should either occur tangibly (i.e. in actual cash) or be something that serves and takes the ruling of receiving cash and exchanging hand to hand (like a bank draft or check), as we have already clarified in fatwa 83372.

The fact that you buy the dollar and want to receive it in India, then in this procedure, there is exchange and transfer in the same transaction; the decision of the Islamic Fiqh Academy on the legal solutions on combining exchange and transfer together is as follows:

“A. Money remittances that are offered in one currency and which the customer wishes to transfer in the same currency are Islamically permissible, whether this service is free of charge or in return for a fee (an actual fee). If it is free of charge, then it is unrestricted debt transfer (Hawalah Mutlaqah, i.e. a hawalah in which the transferor is not a creditor to the payer and the payer undertakes to pay the debt amount owed by the transferor out of his own money and then he has recourse to the transferor for the same amount) according to those who did not stipulate the indebtedness of the payer; who are the Hanafi School of jurisprudence.

If this service is with a fee, then it is an authorization with a fee, and if those who do the transfers work for the general public, then they guarantee the amounts; as in the case of the general workers (like craftsmen, builders, tailors, shoemakers) who guarantee the items they are hired to make.

B. If what is required in a transfer is to get it in a different currency, which means in a currency other than the amounts (currency) provided by the applicant, then the procedure includes exchange and transfer that are referred to in paragraph (A) and the exchange takes place prior to the transfer; this is by the customer giving the amounts to the bank (or the exchange company) and the bank (or the exchange company) registering it in its registers after the agreement on the exchange rate stated in the receipt given to the customer, and then the transfer takes place with the meaning that is mentioned above.”

Based on the above, if the exchange of the money takes place and then the transfer to India, there is nothing wrong with this according to the decision of the Islamic Fiqh Academy quoted above.

As regards the exchange of currency in the black market, then we have already mentioned its ruling in fatwa 83740.

Allah knows best.