بِسْمِ اللَّهِ الرَّحْمَنِ الرَّحِيمِ

In the Name of Allah Most Merciful Most Kind

Short Answer

A person must return haram wealth to the rightful owner. If is not possible to return these earnings to the rightful owner, then they have to give the haram money to charity without the intention of receiving reward. Rather, you must have the intention of removing Haram wealth from your possession.

Explanation

There are many different ways of acquiring prohibited wealth. Therefore, the action that needs to be taken can vary a great deal, depending on the specific circumstances. As a result, one should study the Fiqh of trade in order to get a more complete understanding of the subject matter.

However, if the wealth is such that it legally belongs to another then one must return it to the true owner or his inheritors. It is not permitted to consume it.

لاَ تَأْكُلُوَاْ أَمْوَالَكُمْ بَيْنَكُمْ بِالْبَاطِلِ

Do not consume one another’s wealth unjustly (Surah al-Baqarah, 188).

Classical Scholars

كَسْبُ الْمُغَنِّيَةِ كَالْمَغْصُوبِ لَمْ يَحِلَّ أَخْذُهُ، وَعَلَى هَذَا قَالُوا لَوْ مَاتَ الرَّجُلُ وَكَسْبُهُ مِنْ بَيْعِ الْبَاذَقِ أَوْ الظُّلْمِ أَوْ أَخْذِ الرِّشْوَةِ يَتَوَرَّعُ الْوَرَثَةُ، وَلَا يَأْخُذُونَ مِنْهُ شَيْئًا وَهُوَ أَوْلَى بِهِمْ وَيَرُدُّونَهَا عَلَى أَرْبَابِهَا إنْ عَرَفُوهُمْ، وَإِلَّا تَصَدَّقُوا بِهَا لِأَنَّ سَبِيلَ الْكَسْبِ الْخَبِيثِ التَّصَدُّقُ إذَا تَعَذَّرَ الرَّدُّ عَلَى صَاحِبِهِ

(رد المحتار)

The earnings of a singer are liked usurped wealth. It is not permitted to take the payment. Based on this they said if a man dies and his earnings were from selling intoxicants, oppression or taking bribes then the inheritors should be scrupulous and not take any of it, this is most correct for them. They should return it to the people it truly belongs to, if they know who they are. Otherwise, they should give it to the poor, because impure earnings should be given to the poor (as charity) if it is not possible to return the wealth to the true owners. (Radd al-Muhtaar).

However, if one cannot return this wealth, this money must be given in charity. Consequently, a person will have to give haram money to charity without the intention of receiving reward but rather to removing Haram wealth from his assets.

And Allah Most High Knows Best.

–Answered by Shaykh Noorud-deen Rashid (04.01.24)