Who regulates Labuan’s business and financial centre?

Labuan FSA is an agency to rationalise the regulatory framework of the business and financial centre.

 

By Sazali Suzin

Labuan was designated as the country’s International Business and Financial Centre (IBFC) (formerly known as International Offshore Financial Centre) in 1990. There were several agencies that were involved at the early stages of Labuan’s establishment as International Business and Financial Centre.

The Malaysian government set up Labuan FSA as a one-stop agency to rationalise the regulatory framework of the business and financial centre.

In 2008, an official agency namely Labuan IBFC Incorporated was established as the jurisdiction’s marketing arm. Labuan FSA and Labuan IBFC Incorporated work together to achieve the objective of enhancing Labuan’s reputation as a premier International Business and Financial Centre in the Asia region.

Labuan Financial Services Authority

Labuan Financial Services Authority (Labuan FSA) (formerly known as Labuan Offshore Financial Services Authority (LOFSA) was established on Feb 15, 1996 as the regulator for Labuan International Business Financial Centre.

The roles and function of Labuan FSA include developing national objectives, policies and setting priorities for the development and administration of Labuan International Business Financial Centre.

Labuan FSA also is responsible for the promotion and development of the jurisdiction by recommending to the government on new measures and steps to increase the growth of Labuan as International Business and Financial Centre.

The main focus will be directed particularly on policy and legal matters. Labuan FSA is also the regulatory body responsible to supervise the operations and activities of the industry and to process the applications to conduct business in the jurisdiction such as incorporating and registration of Labuan companies, Labuan banking, Labuan insurance and reinsurance related business, Labuan trusts and fund management, and Labuan foundations.

The roles and powers of Labuan FSA is described and governed by the Labuan Financial Services Authority Act 1996.

Key provisions:

Under this legislation, Labuan FSA is allowed and given the power to administer, carry out and enforce the Labuan legislation to all industry players in this jurisdiction. Some of the key provisions relating to the regulatory and supervisory powers of Labuan FSA are, inter alia, as follows:

1. To administer, enforce, carry out and give effect to the provisions of the Act;
2. To exercise, discharge and perform such powers, duties and functions under the laws;
3. To maintain the good rapture of Labuan as an International Business & Financial Centre;
4. To carry out research and commission studies on financial services in Labuan;
5. To recommend for creations and improvement of facility in Labuan;
6. To advise and make recommendations to the Minister on matters relating to Labuan financial services

Labuan FSA is always reviewing the legal framework and monitoring the activities in Labuan IBFC to reflect Labuan FSA’s unwavering commitment in preventing money laundering activities and terrorists from using Labuan IBFC as a conduit to conceal their assets and funds, in compliance to the Anti-Money Laundering Act 2001 and the Anti-Money Laundering/Counter Financing Terrorism Guidelines 2001 (AML / CFT).

Labuan legislation will continually be reviewed by Labuan FSA to ensure the growth of business in Labuan while prudential supervision of the businesses in Labuan International Business Financial Centre is given sufficient focus.

Bank Negara Malaysia and Inland Revenue Board of Malaysia are responsible for regulating exchange control and taxation matter.

Labuan IBFC Incorporated

The name of Labuan International Business and Financial Centre was introduced in January 2008 to replace the name Offshore Financial Centre as part of an aggressive rebranding and marketing exercise to promote
Labuan as major International Business and Financial Centre hub in the world, especially in the Asia region.

Labuan IBFC Incorporated established in July 2010, is the official agency sanctioned by the Government to promote, market and be the main point of contact for the Labuan International Business and Financial Centre.

Since its establishment, Labuan IBFC worked hard to promote and market Labuan International Business and Financial Centre by organising and involved in international seminar, mainly focus on the products and services offered by the jurisdiction.

With the establishment of Labuan IBFC Incorporated which focus on marketing and promoting Labuan as International Business and Financial Centre, Labuan FSA can concentrate on the administration and regulatory matters of the jurisdiction.

Labuan IBFC Incorporated and Labuan FSA work closely together by focusing in five key areas which are holding companies, Islamic finance, insurance including captive insurance, fund management and wealth management to achieve the target of enhancing Labuan’s reputation.