Global bank HSBC to review its ‘halal’ fund’s $38m stake in Israeli-military tech firm
Bank's sharia-compliant fund bought shares in US spy-tech firm that supplies Israel's military, prompting backlash and divestment campaigns
LONDON (MNTV) — HSBC, one of the world’s largest banks, has agreed to review a controversial $38 million investment in the U.S. surveillance-technology company Palantir held by its sharia-compliant Islamic equity fund, after an exposé by the Muslim news outlet Hyphen triggered a fierce backlash among British Muslim savers.
As Hyphen first revealed, HSBC’s Islamic Global Equity Index Fund purchased shares worth around $38.3 million (£29.7 million) in Palantir during the first half of 2026.
The company signed a strategic partnership with Israel’s Ministry of Defense in January 2024 to supply “advanced technologies in support of war-related missions” — meaning that British Muslims investing in an ostensibly ethical, faith-compliant fund may have been unknowingly profiting from the assault on Gaza.
The disclosure matters well beyond HSBC, because most sharia-compliant U.K. workplace pension schemes are invested in its fund.
Among them is Nest, the country’s largest workplace pension provider, whose own sharia fund — used by more than 33,000 savers — had placed 70 percent of its money into the HSBC fund.
Senior Nest specialists held initial talks with HSBC this week, Hyphen reported, while the People’s Pension, which has more than seven million members, also raised concerns over Palantir’s inclusion.
In response, an HSBC spokesperson said the bank understood how important it was that such funds reflected the values of those who invest in them, and would review the matter “carefully, in partnership with independent expert advisors,” committing to act swiftly.
Gap in rules
The controversy has exposed a gap in how Islamic finance screens investments. Under standard sharia-compliance rules, a company can qualify provided no more than 5 percent of its income derives from impermissible sources — but those screens focus on alcohol, gambling, weapons and interest.
A firm like Palantir, whose core business is technology, can pass the test even while partnering with a military engaged in conduct many Muslims find abhorrent.
Palantir’s software helps governments, police and militaries sift vast datasets, including systems that assist soldiers in identifying targets — part of what the company itself has described as an “AI-powered kill chain.”
When a heckler told Palantir’s chief executive Alex Karp in 2025 that its technology “kills Palestinians,” he replied: “Mostly terrorists, that’s true.”
The affair has prompted calls to tighten the rules at the highest levels of Islamic finance. The Islamic Finance Guru website launched a campaign urging Muslim savers to demand divestment from Palantir and defence firms.
And Mufti Taqi Usmani — one of the most influential scholars in the field and chair of the sharia board of AAOIFI, the global standard-setter — was pressed on the issue at an Islamic finance summit in London.
Asked whether it was sharia-compliant to invest in a company arming “an army that is killing our brothers and sisters,” Usmani said it depended on the circumstances, but added: “When you are 100% sure that the person who is buying this will use it in a haram way to harm others, in that case it would be haram.”
The episode follows a 2025 Hyphen investigation that found six Islamic funds held more than $1 billion in shares of firms whose technology had reportedly aided Israel’s genocidal effort — a reckoning for an industry built on the promise of ethical, faith-aligned investing.
We must take charge of our narrative. Research indicates that 92% of their Muslim coverage is negative. Help us change that.
Have Your Say!
Have you been affected by the issues raised in this story? Please share your experiences by emailing haveyoursay@soundvision.com.
Please include a contact number if you are willing to speak to a Muslim Network TV’s representative. You can also get in touch in the following ways:
Tweet: @MuslimNetworkTV
