What is the ruling on Tawarruq from Kuwait Finance House in the manner described, which is: the client submits a price offer for the goods, then Kuwait Finance House buys and possesses them, then sells them to the client and gives him a delivery permit to receive them from the original seller?

For the murabaha transaction to be valid, the financing institution must take full possession of the commodity before selling it to the client. This is based on the Prophet's (peace be upon him) prohibition of selling commodities before taking possession of them. Possession is achieved by moving the commodity or enabling the buyer to dispose of it. The manner of possession varies according to the nature of the commodity and custom. The seller must own and possess the commodity before selling it to the client; it is not permissible for him to sell it before that. The preponderant opinion is that possession is a condition for all commodities. If the client desires tawarruq, it is a condition that the commodity be sold to a third party other than the financing institution or the original seller.