Anyone, including non-residents, can open an offshore bank account in Malaysia, but the right to reject an application lies with banks. Typically, banks refuse banking services to politically exposed persons as they are considered to be a “reputation” risk. Banks might also refuse if there are doubts about the origin of funds. Further, Labuan banks are restricted by law when it comes to accepting money which has presumably stemmed from illegal activities or crime.
In general, the procedure for opening an offshore bank account involves preparing and submitting the documents listed below:
- Account opening application form duly filled in.
- Bank Specimen cards duly signed/verified.
- For corporate accounts – Copy of the Articles of Association and Certificate of Incorporation duly notarized.
- For corporate and/or personal accounts – Copy of government issued passport duly certified, original utility bill as residential address proof, and bank/professional reference. In the case of bank reference, international banks are preferred even though it is not a must as far as some banks are concerned. It should state the type of account, years of banking relationship, and whether banking conduct has been satisfactory.
- CV or resume of the prospective account holder, nature of the business being carried out, a projection of business cash flow, company/business profile, the source of funds, names of counterparties, and the reason for opening an offshore account in Malaysia may have to be furnished. However, the requirements may vary from one bank to another.
- You may not be required to be physically present for opening an offshore bank account in Malaysia, but it is a good idea to meet the bank officials as it would be helpful in future dealings with the bank.
While it can take anywhere from a couple of working days to three weeks to open an offshore account, the bank options typically include local banks, international banks, Islamic banks, commercial banks, private banks, and conventional banks. International banks may demand a higher initial deposit.
New Labuan Tax Law
A new tax law comes into force from this year. The new law offers a single-tier tax rate and allows Labuan business owners to deal with Malaysian entities in Ringgit. While a trading company is charged only 3 percent tax, an investment holding and investment companies are not required to pay any tax. The new tax rate, however, is not applicable for Labuan companies that hold intellectual properties and receive royalties.
Labuan IBFC (International Business and Financial Centre) presents an ideal balance between international best practices and standards compliance and client confidentiality. In addition, the Labuan FSA (Financial Services Authority), the regulator, enforces a modern, internationally-recognised, and robust legal framework which, in turn, supports the business-friendly environment and the attractive and simple tax system
In conclusion, Labuan IBFC facilitates a variety of investment and business structures to enable cross-border transactions, wealth management needs, and business dealings. When it comes to due diligence, the requirements of banks vary but the major requirements discussed above remain the same.