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Guide to Set Up Labuan Investment Bank

Labuan Jurisdiction Investment Bank Activities:

This article intends to show you the full Guide to Set Up Labuan Investment Bank!

Labuan International Bank Financial Centre is known for it’s strong regulatory framework. The framework is flexible, with it’s favorable tax regimes and low cost of set-up and operation. As a result, Labuan has successfully attracted many international investment bankers to set up in Labuan Jurisdiction such as Credit Suisse, Sumitomo, DBS, OCBC, etc. Labuan Commercial Bank and Labuan Investment Bank licenses are not identical and they have slightly different in business activities, hence they require different licenses to operate. [Read: Labuan Commercial Bank]

Labuan Investment Banks primarily serve corporations and government bodies and high net worth individuals as part of their Wealth Management business. Labuan Investment Banks are permitted to conduct all business activities of commercial banks, except receiving individual/corporate account deposits.

Permitted Business Activities of Labuan Investment Bank include:

1. The business of providing credit facilities (Transaction Banking)

  • Principal investing
  • Trade financing (letter of credit, performance, and financial bank guarantees)
  • Project/asset financing (project evaluation/ feasibility studies)
  • Syndication/ loan arrangement
  • Revolving credit

2. The business of providing consultancy and advisory services relating to corporate matters (Corporate Finance)

  • Mergers and acquisitions
  • Initial public offerings (IPO)
  • Capital restructuring
  • Dealing in securities (e.g. debt issuance)

3. The business of undertaking foreign exchange transactions, interest rate swaps, dealings in derivative instruments or derivative financial instruments or any other similar risk management activities (Securities Trading)

  • Derivatives (interest rate swaps, cross-currency swaps)
  • Hedging (interest rates, LIBOR, etc)
  • FOREX (foreign exchange)
  • Treasury/government bonds
  • Unit trusts
  • Funds
  • Listings of financial instruments on Labuan International Financial Exchange (LFX)
  • Proprietary trading
  • Issuance of financial products for sale

4. The business of providing consultancy and advisory services relating to investment matters (Asset & Wealth Management)

5. Labuan Islamic investment banking business, if Shariah-compliant.

Other Guidelines for Labuan Investment Bank include:

  • Cannot accept deposits for individuals and corporate 
  • Permissible in dealing with Malaysian Ringgit and foreign currencies
  • Minimum working fund/capital of RM 10 million or equivalent in any other currency must be maintained throughout the business operation
  • Every director or principal officer (PO) of a Labuan investment bank must be a fit and proper person and shall not be subject to any adverse report from any reliable sources. Appointment of a director or PO of a Labuan investment bank must obtain prior approval from Labuan FSA
  • FATCA Compliance – Reporting on US citizens/residents is required for dealings exceeding USD 50,000
  • Must maintain a physical presence in Labuan with a minimum of 3 staffs with annual spending of a minimum of RM180,000. Permissible to establish a Marketing Office anywhere in Malaysia.

Main Governing Legislation/Acts for Labuan Investment Bank include:

  • Exchange Control Act 1953
  • Guidelines on Anti-Money
  • Laundering and Counter Financing of Terrorism (AML/CFT)
  • Labuan Financial Services and Securities Act 2010
  • Financial Services Act 2013

In evaluating the best place to domicile your Investment Banking business, consider your business objectives and intended activities. Labuan may be able to help you meet your business objectives. We help clients by providing one-stop solutions from Labuan company incorporation to complete handover, including the application of licenses for operation.

Criteria for Labuan Investment Bank License:

The application may be accepted from any one of the following:

  • An investment bank or group engaging in investment banking activities licensed by the regulatory authority in the country of origin; or
  • A licensed bank or an established financial institution or financial service provider supervised by a competent regulatory authority; or
  • Any institutions licensed under the Financial Services Act 2013 with prior approval from Bank Negara Malaysia;  or
  • Corporations with the necessary expertise and experience in the financial industry with at least three (3) years of good track record and regulated by an authority in their home country.

We provide a one-stop application solution for Labuan Investment Bank License includes:

  • Consultation of your eligibility and procedures based on your profile
  • Profiling, due diligence and guidance on documents preparation
  • Preparation of Business Plan and Financial Forecast, AMLA and KYC Framework
  • Submission and supervise the application process
  • Act as your liaison and contact point with Labuan FSA for all correspondence and arrange an 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 (Trust License No. LT 0034) with a highly experienced team of dedicated professionals handle all 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 insurance business needs as well as onwards operation.

Labuan Investment Banking License Application Time Frame:

1. 2 to 3 months depending on the completeness documents
2. Key personnel may be required by the Labuan FSA to attend interviews.

Feel free to contact us on how to best structure your banking business and license qualifications! Our One Labuan Platform easy to elevate your Labuan operation efficiently!



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