LFSA Regulatory Entity

Labuan Financial Services Authority (Labuan FSA) is responsible for providing financial services in Labuan and was created by Law No. 66 of 1966 on 15 February. As a statutory body, the Labuan FSA’s responsibility is to develop and manage Labuan International Business and Financial Centre (Labuan IBFC).

Objectives of LFSA

Listed below are the objectives of the Labuan FSA

Developing and promoting Labuan as an international centre of business and finance services.
Policies and objectives will be developed and implemented to develop and administer international businesses and financial services in Labuan.
Regulatory, supervisory, and enforcement agency for financial and international services.

Labuan FSA licenses and regulates companies operating within Labuan IBFC. It ensures that these companies abide by all applicable laws and regulations of Labuan and International standards.

In addition, as part of Labuan IBFC’s regulatory policy development, the Labuan FSA ensures orderly business conduct.

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Functions of LFSA

Labuan FSA has been entrusted with the following responsibilities

Apply and enforce laws of Labuan Islamic Banking and Finance Corporation and carry out their provisions.
Exercising, performing, and discharging the powers as mentioned earlier, duties and functions following the laws.
To maintain the reputation of Labuan IBFC as an international financial and business centre.
To conduct research and commission studies on the financial services in the Labuan IBFC.
In making recommendations for improving and creating facilities that will make Labuan IBFC a more attractive destination for financial services.
To cooperate why Labuan financial institutions and industry associations to promote the growth and development of Labuan’s business and financial services
To provide the government with advice and recommendations regarding financial services within the Labuan IBFC.
Assemble all the necessary activities and measures to enable appropriate administration of the authority or fulfil any other purpose mandated by the Minister.

Guidelines

LFSA provides guidelines on the following principles:

Submission of Audited financial statements by Labuan entities.
Business continuity management
Dealing with specified person and currency
Clarification on application by foreign audit firms
External service arrangements for Labuan financial institutions
Payment of fees and other chargeable in USD denomination
Establishment of Labuan marketing office.

LFSA Financial Services

Following are the financial services provided by Labuan FSA

Banking

In addition to offering a wide range of wholesale commercial and investment banking solutions, Labuan IBFC has more than 50 banks. Similar to Malaysia, Labuan IBFC offers access to conventional and Islamic finance banking.

Insurance

Asia’s continuous (re) insurance market growth has made Labuan IBFC an increasingly popular jurisdiction for insurance companies and insurance intermediaries. The Labuan IBFC was located strategically to bring together more than 200 (re) insurance and insurance intermediaries. Their services range

Leasing

Leasing firms in Labuan typically provide plants and equipment, ships, and aircraft to countries in the oil and gas industries and their aviation industries. Businesses in South East Asia and Malaysia, in particular, can take advantage of Labuan IBFC’s leasing solutions at a reasonable cost. Moreover, in Labuan IBFC, leasing can be accomplished through conventional and Sharia-compliant methods.

Money brokering

In the Labuan money broking market, the licensed money brokers mediate between the clients and counterparties by linking clients and counterparties on the capital and foreign exchange markets.

However, brokers facilitate transactions after receiving payments from the commissions or brokerage fees.

In addition, many money brokers have been modernizing their offerings by providing online trading platforms to ride the waves of financial digitalization.

Commodity trading

The LFSA offers Global Incentives for Trading as an incentive program to traders of specific commodities so that new traders use Labuan as their international trading base.

Labuan International Commodity Trading companies are license holders that deal with eligible commodities, including petroleum and petroleum-related products such as liquefied natural gas.

It also deals with other commodities such as minerals, agricultural products, refined raw materials, chemicals, base material, and coal.

Credit token companies

LFSA, as a part of the credit token program, issues credit tokens such as cards, cheques, vouchers, booklets, stamps, coupons, and other documents to its customers.

Additionally, LFSA also provides credit tokens to companies that want

That’s why digital token companies such as Labuan credit token companies can build a Blockchain ecosystem to allow users to engage with digital assets. For example, a participating merchant may provide goods and services for the purchase of real estate investment.

Company management business

Labuan IBFC provides company management services through treasury processing and other services to those licensed or registered by LFSA.

However, the provision of Treasury processing activities includes both back and middle office functions such as validating deals, preparing accounting records and files, and custodial services.

Wealth management

Consequently, with the LFSA’s comprehensive ecosystem and the strong set of legislations, Labuan IBFC can effectively provide comfort and protection to wealth management activities.

In addition to its wealth management and estate planning capabilities, it also offers other things. For example, the centre provides investors, particularly affluent individuals, and an opportunity to structure and administer their wealth.

Digital Financial Services

The main focus of Labuan IBFC is to provide fit-for-digital business structures to facilitate various digital financial-related businesses in the centre. Among them are digital banking, insurance technology, and digital intermediaries like Robot-advisors, blockchain tokens, crypto-trading platforms, and digital asset exchanges.

However, to engage in proposed DFS activities, Labuan entities must obtain the approval of the Labuan Financial Services agency.

Capital Markets

Capital market intermediaries licensed by Labuan FSA make Labuan IBFC’s capital market ecosystem. These include funds managers, fund administrators, custodians, and securities licensees who facilitate the centre’s international investments and fund setups

However, most Labuan fund managers and securities licensees originate from Asia and Pacific region, while some are from Europe and America.

Exchange

Further, a Labuan exchange is used to list and trade financial instruments such as equities, investment funds, debt instruments, digital securities, and cryptocurrencies.

Bottom line

It is the Labuan International Business and Financial Centre (Labuan International Business and Financial Centre) to develop and administer the Labuan FSA.

Labuan FSA is responsible for ensuring that all entities licensed by the authority are in compliance with both internal and international standards and that they operate within the Labuan IBC. Labuan FSA also works to ensure that business conduct and financial services are conducted orderly at Labuan IBFC.

Categories: Global Regulatory Entities | Author: jason | Date: 14 January 2022

jason

Jason Morgan is an experienced forex analyst and writer with a deep understanding of the financial markets. With over 13+ years of industry experience, he has honed his skills in analyzing and forecasting currency movements, providing valuable insights to traders and investors.

Forex Content Writer | Market Analyst

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