Frequently Asked Questions

Labuan banking means the business of receiving deposits on current accounts, deposit accounts, savings accounts, and includes the investment banking business, Labuan financial business, Islamic banking business and such other transactions and terms and conditions as specified by Labuan FSA in any currency including Malaysian Ringgit where permitted by Bank Negara Malaysia.

Investment banking means the business of providing credit facilities and consultancy and advisory services relating to corporate and investment matters, including making investments on behalf of any person. Other activities include undertaking foreign exchange transactions, interest rate swaps, dealings in derivative instruments or derivative financial instruments or any other similar risk management activities.

Islamic banking is defined as a banking business that is in accordance with Shariah principles.

Organisations that meet the following minimum criteria may apply for a Labuan banking licence:

  • Must be a bank or financial institution
  • Possesses a sound track record
  • Accorded a good credit rating by acceptable rating agencies
  • Supervised by a competent regulatory authority; and
  • Conforms to generally accepted standards of international banking practices or the Bank for International Settlements (BIS).

RM10 million or its equivalent in any other currency.

Labuan banks offer the following products and services:

  • Term/fixed deposits in major international currencies
  • Project financing (project evaluation/feasibility studies)
  • Capital restructuring
  • Revolving credit
  • Syndication/loan arrangement
  • Trade financing (letter of credit)
  • Islamic financing
  • Performance and financial guarantees
  • Private banking/portfolio fund management
  • Investment banking / corporate advisory (initial public offerings (IPO), mergers and acquisitions)
  • Listing of financial instruments on the Labuan International Financial Exchange (LFX)
  • Proprietary trading and investment (bonds, equities)
  • Remittances
  • Foreign exchange
  • Foreign currency term loan
  • Derivatives (interest rate swaps, cross currency swaps)
  • Hedging (interest rates – Chicago Board of Trade (CBOT), London Interbank-Offered Rate (LIBOR), etc)
  • Correspondent banking (for Malaysian banks).

There is no cash transaction in Labuan IBFC. In addition, a Labuan investment bank is not allowed to accept deposits.

Yes, they can, subject to the Exchange Control Notice No. 2 issued by Bank Negara Malaysia as follows:

  • For resident entities — up to an equivalent of RM100 million in aggregate.
  • For resident individuals, sole proprietors or general partnerships — up to an equivalent of RM10 million in aggregate.

With respect to trade financing, buyers and sellers can be outside of Malaysia and the underlying goods to be exported to, or imported from, other countries may also include Malaysia.

Labuan banks are governed by the following Labuan laws:

  • Labuan Financial Services and Securities Act 2010
  • Labuan Islamic Financial Services and Securities Act 2010
  • Labuan Companies Act 1990
  • Labuan Business Activity Tax Act 1990

Fees

Amount

Processing Fee

RM 1000/ $350

Annual Fee

Amount


Labuan Banks / Labuan Investment Banks

RM100,000 / USD30,000

Co-location Office

RM10,000 / USD3,500

Marketing Office

RM7,500 / USD2,500

All licensees are required to pay to Labuan FSA annual licence fees on or before 15 January of each year.