Some critics suggest such practices amount to mortgage by another name. Another critique is that they invite abuse of “the poorest sections of homeowners in the Muslim world, who have been told, ‘If you deal with banks that deal with interest, you will go to hell,’” said Tarek Fatah, a liberal Toronto Muslim who points out what he regards as fundamentalist practices.
Other observers say Canada needs to figure out a way to better regulate sharia financing models, given the brisk demand. “It's going to grow,” said Walid Hejazi of the University of Toronto’s Rotman School of Management, which now offers courses in Islamic finance. “In the U.S., it’s doing well, in the U.K. it’s doing well, but in Canada it’s lagging.”
Prof. Hejazi said various levels of Canadian governments, as well as big banks, are studying Islamic finance models – up to $1-trillion of “excess liquidity” in the Gulf states could be translated into some foreign direct investment one day.
There are also discussions, he added, about whether Toronto should seek to become a North American hub of Islamic banking. “If you get more players you get more transparency.”...Actually, what you get is more sharia.
Update: From an article last fall in the U of T Magazine:
Hejazi has developed a three-day executive program – which he believes to be the first of its kind in Canada – that will teach participants the differences between Shariah-compliant and conventional financial instruments using retail and commercial banking examples, such as mortgages and bonds. (Islamic law prohibits the payment or acceptance of interest on loans.) Program participants will also learn about Shariah-compliant derivatives and the legal and tax implications of Shariah finance. Hejazi says Canada’s attractiveness to foreign investors has been slipping over the last 40 years. He argues that expanding Islamic finance would make Canada a more appealing destination for capital internationally.
However, Tarek Fatah, founder of the Muslim Canadian Congress, a liberal group, argues that Shariah financial instruments have a ghettoizing effect on Muslims because they separate people based on their religion. He also fears broader repercussions. “The danger is that we are legitimizing Shariah law,” he says.
Hejazi rejects Fatah’s claims. He says Canadian Muslims are currently at a disadvantage because they cannot access Shariah-compliant products at conventional banks. “If the main banks understand and offer these products, they’re regulated, and there’s more competition. We’re simply talking about financial securities with different characteristics that anyone – Muslim or non-Muslim – can use.”