Guide to Apply For Labuan Commercial Banking License

Starting a bank in an onshore environment is subjected to very restrictive conditions. Often the applicant will require local resident participation. This is not the case in Labuan International Business and Financial Centre (Labuan IBFC). Labuan IBFC warmly welcome qualified candidates (individual or corporations) to apply for the Labuan Banking business license. A 100% foreign ownership of the bank is permissible and the owner retains  total control of the business. 

Types of Banking Licenses in Labuan

Malaysia has a very developed conventional and islamic banking industry. Within each of the 2 banking systems, 2 types of banking licenses are available in Labuan. They are as follows: 

  1. Labuan Commercial Bank
  2. Labuan Investment Bank

 

The main difference between the two is that, unlike Labuan Commercial Bank, a  Labuan Investment Bank is not allowed to receive deposits on a current account, deposit account, savings account or any other account.

Labuan Commercial Bank can perform the business activities listed below: 

  • Business of receiving deposits on a current account, deposit account, savings account or any other account
  • Providing credit facilities
  • Providing consultancy and advisory services relating to corporate and investment matters
  • Dealing in securities
  • Undertaking foreign exchange transactions
  • Interest rate swaps
  • Dealings in derivative instruments or derivative financial instruments or any other similar risk management activities
  • Fund management
  • Other business as the Labuan FSA may allow, with the approval of Minister.

14 BENEFITS OF A LABUAN COMMERCIAL BANKING BUSINESS

  • The strategic location of Labuan to capture the Asia Pacific especially Asian businesses!
  • Labuan has the same time zone as a major Asian cities-easy for real-time transactions to be made!
  • Excellent infrastructure, regulation, and amenities of the Labuan IBFC!
  • Labuan is a “white” listed jurisdiction, endorses the bilateral exchange of tax info!
  • Labuan entity recognized by Hong Kong and Singapore Exchanges for listing!
  • Access to more than 70 double tax agreements with Malaysia!
  • 100% ownership is permissible!
  • Low corporate tax rate of only 3% !
  • Permissible to deal with local residents in Malaysian Ringgit!
  • No withholding tax on beneficial owner’s income!
  • Expatriates eligible for 2 years’ work permit together with their family members!
  • Eligible to set up Marketing Office anywhere in Malaysia!
  • Eligible to set-up a Co-Located office in any part in Malaysia!
  • A minimal annual license fee of USD 30,000 (approx) only!

 

Registering a bank is a complex and intricate journey that can cost a lot of money and time. When you have considered and decided to establish a commercial banking business in Labuan, we will guide you with a personalized approach, every step of the application process.  We start with the application for your Labuan Commercial Banking license application with the Labuan Financial Services Authority (Labuan FSA). Labuan FSA is the main license issuing authority in Labuan. With our careful planning and guidance, we will steer you with a comprehensive strategic planning, and also structuring the right profile, to meet all the Labuan FSA’s licensing requirements effectively. Our team will also assist you as you go through all the legal and financial considerations that will lead to a final and complete, formalizing and set-up, of a registered financial institution with Labuan FSA, until your Labuan Commercial Banking license conditional approval letter is obtained.

Labuan Commercial Banking License – The Requirements

The applicant should meet the following minimum eligibility criteria:

  1. Must be a bank or financial institution with a license
  2. Possesses a soundtrack record
  3. Accorded a good credit rating by acceptable rating agencies
  4. Supervised by a competent regulatory authority; and
  5. Conforms to generally accepted standards of international banking practices or the Bank for International Settlements (BIS), as the case may be.

 

After the license is approved, to operate your Labuan banking business, the entity must be a Labuan company registered under the Labuan Companies Act 1990.

Labuan Banking License Procedure

  • Propose A Name For The Bank
  • Submit Banking License Application To Labuan FSA
  • Conditioning Approval Processing (30-60 days)
  • Form Your Labuan Company
  • Fulfill All Requirements On Per Conditional Approval
  • Banking License Issued

To apply for Labuan Commercial Banking license the following information and documents are required:

  1. Business Plan for the banking business with 3 years’ of financial projections, AMLA and KYC framework, risk policies and operational frameworks and manpower needs forecasts.
  2. Company Statutory documents of the applicant company- certified copy
  3. 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
  4. Three (3) years’ consecutive audited accounts of the holding company or participants who hold minimum 10% of or more of the paid-up capital
  5. Letter of Guarantee from the applicant’s shareholders/head office
  6. Letter of Awareness from a competent regulatory authority which supervises the applicant’s shareholder/head office
  7. Memorandum and Articles of Association 
  8. Board’s Resolution to apply for Labuan Bank license

The Labuan Commercial Banking License approval conditions and operational requirements include:

  1. All business transactions must be done from and through Labuan.
  2. The company must have an operation office in Labuan with a minimum of 3 staff with an annual spending of RM 180,000.
  3. The company shall maintain such capital adequacy of RM10 million at all times.
  4. A licensed Labuan banking business may be allowed to deal with 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.
  5. Every director or principal officer (PO) of a Labuan bank must be fit and proper persons.
  6. The appointment of a director or PO of a Labuan bank must obtain prior approval from Labuan FSA.
  7. Comply with the statutory requirements under the Labuan Financial Services and Securities Act 2010.
  8. Comply with the prudential and reporting requirements issued by Labuan FSA.
  9. Adhere to any other requirements issued by Labuan FSA from time to time.
  10. To obtain necessary approval or meet certain pre-determined criteria, should it prefer to set up the Marketing Office or Co-locate to any other parts of Malaysia.

Labuan Commercial Banking License – Managing Your Labuan Bank with a holistic approach

Running the banking business can be overwhelming and complicated. It may requires funding from investors. It will definitely requires many levels of expertise in the areas of finance, systems and operations to meet the licensing criteria. This is more pressing for applicants who are new to the banking business and now, operating in a new jurisdiction. We provide complete management outsourced solutions to support and promote your business activities at every stage of a Labuan banking business. Our services can be so comprehensive that can include everything you need to make sure your company is compliant with all Labuan Acts. We can help reviews of your accounting and corporate governance policies and systems, as well as you financial statements being approved and readily for audit.

REPORTING AND COMPLIANCE REQUIREMENTS FOR A LABUAN COMMERCIAL BANKING BUSINESS

  1. Submit accounts to Labuan FSA within six months after the close of each financial year
  2. Submit statistics and information required to Labuan FSA from time to time
  3. To pay all annual fees due to Labuan FSA and license fees as follows:

Labuan Banking License Fee  USD30,000
Marketing Office Fee  USD2,500
Co-Located Office Fee USD3,500

We provide one-stop application solutions for the Labuan Banking License includes:

  • Consultation on your eligibility and procedures based on your profile
  • Profiling, due diligence and guidance on documentation preparation
  • Preparation of Business Plan, Financial Forecast and Operation Manuals
  • Submission and supervision of application process until approval
  • Act as your liaison and contact point with Labuan FSA and arrange for interview (if any)
  • Track the license approval and attend all queries from Labuan FSA

WHY our Trust Company for Your LABUAN SET UP?

We are a full-fledged licensed Labuan Trust Company (License No. LT 0034) with a highly experienced team of dedicated professionals handle license applications. We provide complete “one-stop solutions” in pre-assess, meet, planning, structuring, establishment and corporate service for your Labuan Banking Business, ensuring you get a bespoke service that meets your banking business needs as well as onwards operation.

Call us today at +603-2783 9191 (Labuan Division) or email Tricor.KLMO@my.tricorglobal.com for a private discussion on how to set up your Labuan Banking Business or feel free to drop us your inquiry form to communicate via email. TRICOR’s One Labuan Platform easy to elevate your Labuan operation efficiently!

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