My bank (AlRajhi, KSA) allows me to open a "Gold Wallet" where I can purchase gold with them and have it stored with them. The basics are that there is actual physical gold underlying the transaction. The details of the wallet are included below. Can you kindly comment on whether this wallet is shariah compliant and would it be permissible to use this service to buy gold, store it with them, and sell it at a later date within the same service. It should be noted that the app interface of the wallet currently states that there are no fee for the buying and selling. Storage fee do apply at a fixed rate of SAR 10/month. Jazakallah khair!

Details of the Contract:

Precious Metals Trading Portfolio Opening Terms and Conditions

Product Definition

Product: Purchase and Sale of Precious Metals.
Metals: Gold.

Product Details:

The customer (also referred to as the “Buyer”) hereby grants Al Rajhi Bank an absolute and irrevocable agency to purchase and sell precious metals in global markets, negotiate price, handle storage and delivery. Al Rajhi Bank, on behalf of its customers, may purchase or sell precious metals with banks or reliable and high credit-rated companies conforming to standards set by London Metal Exchange “LME”, through precious metals spot exchange agreements in compliance with the Sharia provisions applicable in Al Rajhi Bank. The exchange of gold as delivered by the seller and the price as paid by the Buyer shall be immediate, where the Buyer’s agent shall receive the gold immediately based on physical receipt so that the Buyer’s metals shall be deposited in the agent’s vaults, with registration of serial number of the bullion being sold, its quantity, purity and place of storage in favor of the Buyer, while the seller shall receive the full price via electronic transfer. The customer’s gold bullion shall be allocated and physically separated from others’ gold bullions if the bullion is separate and belongs to a specific customer. In case of co-purchase of a certain bullion, which the customer possesses in partnership with other customers, they shall share the same serial number, but the share of each customer shall be distinguished according to each customer’s share, in terms of weight and reference number of transaction. Such gold bullions shall be kept in Al Rajhi Bank’s vault in Switzerland, where each gold bullion shall be clearly distinguished by a unique serial number.

First: General Provisions

1. Each dispute that arises between the Parties hereto, and in case the Parties could not resolve it amicably between them, shall be finally determined by the competent judicial authority in the Kingdom of Saudi Arabia.
2. No Investment Advice: the customer hereby acknowledges that the services do not include providing investment advice or personal recommendations regarding a transaction(s) related to the precious metals.
3. Al Rajhi Bank may charge a fee on purchase and sale transactions, and shall notify the customer of the fee before charging it.
4. Only precious metals purchased on behalf of the customer through Al Rajhi Bank may be deposited in the portfolio. No in-kind deposit of precious metals may be allowed in customer’s precious metals portfolio account if it was not purchased through Al Rajhi Bank.
5. Customers wishing to open a portfolio to purchase and sell precious metals shall have a current account in Saudi Riyals.
6. The purchased precious metal may not be transferred to another customer’s portfolio account.
7. Failure by Al Rajhi Bank at any time to exercise any of the rights guaranteed to it hereunder shall not constitute a waiver from Al Rajhi Bank from exercising that right or any other right at any time thereafter.
8. Trading Hours: Business days in the global markets and the London Stock Exchange. Al Rajhi Bank may provide trading service during holidays and weekends with additional fees.
9. The minimum quantity for trading is (1) grams of gold.
10. The customer is not entitled to keep a balance of gold less than (1) grams in his wallet.
11. The bank has the right to transfer the customer’s gold to a new custodian.
12. In the event that the bank’s relationship with the gold supplier is terminated, the bank shall be obligated to replace the shares of the bank’s customers ownership of gold that is less than a complete bullion with another gold of the same purity and quantity of gold, without the customer incurring any fees for that.
13. The bank has the right to replace bullions owned by customers with bullions that have other serial numbers, in the event that there is a benefit for the current owners or the bank without harming any party.
14. The bank guarantees that the substituted bullions are similar to the replaced bullions completely in terms of weight, purity, quality and value.
15. In the event of exchanging bullion, the bank will include the data of the bullion owned by the customer with their serial numbers in the wallet, without obligating the bank to notify the owners at each replacement.

Second: Storage

1. The physical gold shall be kept in a vault with a custodian, which is one of the specialized storage and shipping companies, a third party other than the supplier (the seller) and Al Rajhi Bank, which will be responsible for the task of managing the full day-to-day operations of the custody account. Al Rajhi Bank entered into an agreement to store the physical gold bullions in separate and insured vault and boxes of Al Rajhi Bank.
2. Al Rajhi Bank may charge fees for storing precious metals on behalf of the customer and such fees shall be collected by debiting the customer’s account directly on a monthly basis, and Al Rajhi Bank shall notify the customer of the fees before charging it.
3. In Case of delay in payment of the storage fees payable under the agreed agreement by the customer, the customer shall be notified with appropriate notice of the delay event and shall be requested to make the payment in accordance with the terms and conditions.
4. The customer shall be considered in default if the customer breaches any of the terms and conditions provisions or failed to pay any of the payable monthly fees for a period of ninety (90) days as of the due date. In this case, Al Rajhi Bank may notify the customer in writing of the default event, and that payment shall be made within thirty (30) days as of such notification date.
5. Al Rajhi Bank may, after thirty days from the notification of default, automatically deduct the value of its rights pursuant to all or some of the terms and conditions from any accounts, funds or deposits it has pertaining to the customer without the need for a warning or taking any action, and the customer shall have no objection rights regarding making such deduction, whatever the reason.

Third: Delivery and Receipt

1. Customers wishing to physically receive the metals shall pay any additional fees or costs that may arise as a result of the physical receipt and delivery of gold, including, but not limited to: shipping, storage, insurance or any other expenses that the shipping company may charge.
2. Al Rajhi Bank may reschedule delivery times for the customer, according to the availability of delivery dates.
3. Requesting the delivery of precious metals shall only be available to the customers and receipt shall be made through Al Rajhi Bank branches in the Kingdom of Saudi Arabia, and delivery costs shall be deducted in advance.
4. Only the account holder or agent thereof may receive the specified gold.
5. If the customer requests to deliver the customer’s common share, the customer shall:
   A. Agree with the rest of the purchasers on the delivery, and Al Rajhi Bank shall make delivery to them and they shall bear the delivery costs; or
   B. If there is no agreement on delivery among all partners, in this case, either the purchaser requesting delivery shall sell its share and receive its value in cash or the supplier shall provide the customer with a replacement equivalent to the value of customer’s common share with the same degree of purity with specific bullions, especially if such specific bullions are available and the customer shall pay the delivery expenses, on grounds of the fact that no common share may be delivered without harming to the rest of purchasers.
6. Al Rajhi Bank shall have the right to reject the purchase or replacement of the gold received from the customer.

Fourth: Risks

1. Risk Disclosure: The customer understands that the services provided by Al Rajhi Bank include trading products that carry a high risk that may not be suitable for all individuals. Moreover, the customer acknowledges that the customer is fully aware of the nature of risks of services and relevant trading products, and that the customer is aware that it is impossible to be compensated from our side for any losses as a result of any use of our services.
2. Physical Delivery Risks: The customer realizes that Al Rajhi Bank may be unable to make physical delivery for any reason, including for example but not limited to: stopping international flights, stopping shipping, pandemics, etc., or when the supplier is obligated with a minimum number of requests to make the physical delivery to customers.
3. The customer is aware of the risks of natural disasters, including for example but not limited to: volcanoes, earthquakes, hurricanes, floods and any natural phenomenon that cannot be controlled and that causes significant damage to property and assets, which results in the difficulty of physical delivery of precious metals.
4. Risks of Non-Compliance with Sharia Controls: Al Rajhi Bank may be forced to liquidate open positions if Al Rajhi Bank’s Sharia Board decides that these positions no longer fulfill the controls under which the Sharia Board approved the product.
5. Risks of VAT and Zakat: Investment in precious metals may lead to incurring zakat, or certain taxes imposed by competent authorities, such as VAT.
6. Risks of bankruptcy of entity storing the gold: If the gold is stored in Al Rajhi Bank’s vault, then the customer authorizes Al Rajhi Bank, in the event of bankruptcy of the entity owning Al Rajhi Bank’s vault in Switzerland, to provide all necessary evidence to the responsible authorities in Switzerland to prove the customer’s ownership of gold, and Al Rajhi Bank shall not be the customer’s agent for the above-mentioned purpose in any other case other than what is specified under this Clause.

Fifth: E-Service

1. The customer acknowledges its acceptance of the terms and conditions of e-services provided by Al Rajhi Bank.
2. The account shall only be utilized by the customer personally or whomever the customer authorizes, in such case, subject to Al Rajhi Bank being notified in writing of such authorization.
3. The customer shall hold harmless Al Rajhi Bank for the time required to deliver (mandatory, optional or automatic) SMS or the notification of one-time passwords, as sending them is subject to networks operated by different service providers inside and outside the Kingdom of Saudi Arabia.
4. The customer agrees and acknowledges that Al Rajhi Bank is not obligated to make any payment, internal or external transfer or honor any other instructions unless there is sufficient available balance in customer’s account that can utilized.
5. The customer acknowledges its full responsibility for the customer’s, its employees and agents use of e-services and for conducting the transactions as if the customer was the one who carried them out. In addition, the customer acknowledges its full responsibility for the username and password and its commitment to follow the requirements of protecting all of them and comply with non-disclosure, abuse or piracy by the customer itself or by any person or entity. Moreover, the customer also admits its full responsibility for giving its accounts’ numbers to subscribe in this service to any other person.
6. The customer acknowledges that Al Rajhi Bank, its affiliates and employees are not responsible for any losses, damage, financial claims, etc. resulting from the use of username, password, or PIN number, and the customer undertakes to inform Al Rajhi Bank of the same immediately.

Sixth: The right to amend the terms and conditions:

Al Rajhi Bank reserves the right to amend the terms and conditions at any time.