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Labuan Banking Business

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We will support and promote your activities at every stage of a Labuan banking business. Whether you’re considering establishing a banking business in Labuan or are in the process of managing it, we can help. With extensive experience and a personalised approach, our team of qualified professionals will work closely with you and guide you through all the legal and financial considerations. With us, your Labuan banking business will be structured effectively and meet all the Labuan FSA’s requirements.

Dedicated and with current local and international banking knowledge, we will assist you in establishing, structuring and planning a Labuan banking business.

OVERVIEW OF A LABUAN BANKING BUSINESS

The Labuan Financial Services and Securities Act 2010 clarifies a Labuan banking business as a company that carries out banking activities in any currency permitted by the Exchange Control Act 1953.

This includes receiving deposits on current, deposit or savings accounts or any bank accounts approved by the Labuan Financial Services Authority (Labuan FSA). Other activities that constitute a Labuan banking business are Labuan investment banking, Labuan financial business, Labuan Islamic banking business. The Labuan FSA may also approve additional activities for Labuan banking businesses.

The Labuan banking business is further defined as per below:

Labuan Investment Banking Business Labuan Financial Business
  • Providing credit facilities, consultancy and advisory services relating to corporate and investment matters
  • Dealing in securities
  • Managing investment on behalf of any person
  • Undertaking foreign exchange transaction
  • Interest rate swap
  • Dealings in derivative instruments or derivative financial instruments or any other similar risk management activities.
  • Building credit business
  • Credit token business
  • Development finance business
  • Leasing business
  • Factoring business
  • Money brokering business
  • Labuan financial business
  • Other business as the Labuan FSA with approval of Minister may allow.


All business transactions must be done from and through Labuan. The company must have its office in Labuan. The company or branch must have sufficient capital, and shall maintain such capital adequacy of RM 10 million. No bank shall carry on Labuan banking business if the capital funds are less than this amount. A licensed Labuan banking business may be allowed to deal in Malaysian Ringgit and with Malaysian residents, subject to the provisions under the Labuan Financial Services and Securities Act 2010 and the Exchange Control Act 1953.

BENEFITS OF A LABUAN BANKING BUSINESS

  • Any trading company will only have to pay tax at the generous 3% tax rate or flat fee of MYR20,000 (USD 6,700)
  • No withholding tax on beneficial owner’s income
  • Access to the double tax agreements of Malaysia, which has agreements with 74 jurisdictions
  • Minimal annual licence fee of RM80,000 (USD 13,300)
  • Strategic location of Labuan, with the same time zone as many major Asian cities
  • Excellent infrastructure, regulation and amenities of the Labuan IBFC
  • Confidentiality provided by the Labuan Companies Act 1990
  • Labuan is a “white” listed jurisdiction and endorses the bilateral exchange of tax information with foreign authorities

REQUIREMENTS FOR SETTING UP A LABUAN BANKING AND INVESTMENT BANKING BUSINESS

If you would like to set up a Labuan banking or Labuan investment banking business, the following minimum criteria must be met.

  • Your company must be a Labuan company or a foreign Labuan company incorporated or registered under the Labuan Companies Act 1990
  • It is a Malaysian bank that holds a banking license under the Banking and Financial Institutions Act 1989, with prior approval of Bank Negara Malaysia
  • Your company is an investment bank or group engaging in investment banking activities licensed by the regulatory authority in your country of origin
  • A licensed bank or an established financial institution or financial service provider supervised by a competent regulatory authority
  • Corporations with the necessary expertise and experience in financial industry with at least 3 years good track record and regulated by an Authority in their home countries
  • Must possess sound track record and/or the necessary experience and expertise in similar undertaking
  • Good credit rating by an acceptable rating agencies

An application for a Labuan banking licence should be made in writing to the Labuan FSA. It should be accompanied by the following information:

Application by a Labuan Company Application by Malaysian/Foreign Bank
  • Business plan for the first 3 consecutive years of operations
  • An authenticated copy of the statutory documents of the applicant company
  • A comprehensive corporate profile, which includes:
    • The name, place and date of establishment of the applicant
    • The principal business and principal place of business of the applicant.
    • The name and address of each member who holds 10% or more of the voting shares of the applicant.
  • The names, addresses, qualifications and experience of the directors and officers responsible for the overall management of the affairs of the applicant
  • 3 years consecutive audited accounts of the holding company or participants who each holds 10% or more of the paid up capital
  • Letter of undertaking to undertake any liability arising from the operations of the company.
  • Letter of awareness from competent regulatory authority which supervises the applicant
  • Business plan for the first 3 consecutive years of operations
  • An authenticated copy of the statutory documents of the applicant company
  • 3 years consecutive audited accounts of the development finance business
  • A comprehensive corporate profile, which includes:
    • The name, place and date of establishment of the applicant
    • The principal business and principal place of business of the applicant.
    • The name and address of each member who holds 10% or more of the voting shares of the applicant.
  • Letter of consent from the home regulatory authority (if applicable)
  • Letter of undertaking to undertake any liability arising from the operations of the company.
  • Letter of awareness from competent regulatory authority which supervises the applicant

REPORTING REQUIREMENTS FOR A LABUAN BANKING BUSINESS

  • Submit to Labuan FSA within six months after the close of each financial year, two copies of its audited annual balance sheet and profit and loss account
  • Submit statistics and information required from time to time by Labuan FSA in relation to prudential information, general business conduct and volume of business in Labuan

SETTING UP PROCEDURE

Upon receiving the duly completed and signed documents, we will proceed with the application to the authority as follows:

WHY WE ARE THE RIGHT PEOPLE TO HELP YOU SET UP A LABUAN BANKING BUSINESS

We are a fully licensed trust company with a highly experienced team of dedicated professionals. We can help you plan, establish and structure a Labuan Banking Business ensuring you get a bespoke service that meets your particular business needs. We also offer some of the most competitive prices in the industry.

To find out more about how we can help you set up your Labuan Banking Business contact us on our live support or email us at info@labuanborneotrustees.com