Embarking on the journey to establish a Labuan Digital Bank involves a comprehensive process that aligns with the regulatory standards set by the Labuan Financial Services Authority (Labuan FSA). From understanding the intricate steps of application to meeting the stringent operational requirements, this guide ensures clarity and guidance throughout the licensing process. Explore the distinct requirements, financial commitments, and operational benchmarks to pave the way for a successful and compliant digital banking venture in the vibrant landscape of Labuan.
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Application Process of a Labuan Banking License
- Maintain a minimum paid-up capital of MYR 200 million or equivalent in any foreign currency. Labuan FSA may exercise its discretion to require additional capital to commensurate with the business operations of the digital bank, considering the risk profiles as well as nature, scale, complexity and diversity of the business activities.
- Any proposed reduction in paid-up capital must obtain prior approval from Labuan FSA.
- Place a non-interest security deposit of MYR 5 million or its equivalent, which is refundable after a 3-year period.
- Establish an operational office in Labuan in adherence to Labuan Financial Services and Securities Act (LFSSA) or Labuan Islamic Financial Services and Securities Act (LIFSSA).
- Uphold policies and controls on technology-related areas, especially information security, system resilience, and business continuity management (including IT governance, cybersecurity, online client on-boarding processes and systems).
- Establish cyber risk management policy, procedures for regular reviews of security and technology-related arrangements, and KYC framework.
- The Labuan Digital Bank’s name must be indicated clearly in all communication media.
- Appoint a director, officer or person in control who must be fit and proper. Appointment of director(s) or PO must obtain prior approval from Labuan FSA. The appointment of PO is valid for 2 years, with the option of renewal by submitting the renewal application 1 month before the expiry date.
- Maintain adequate and proper records and books of accounts in Labuan and ensure that all its operations are conducted in, from or through the operational office in Labuan.
- Appoint an internal and external auditor to have its operations and accounts audited under the LFSSA and LIFSSA.
- Comply with applicable laws, rules, and regulations relevant to Labuan digital banking.
- Comply with any additional requirements specified by Labuan FSA periodically.
- Consultation on eligibility and procedural guidance tailored to your profile.
- Profiling, due diligence and guidance on documentation preparation.
- Preparation of Business Plan, Financial Forecast and Operation Manuals.
- Submission and supervision of the application process until approval.
- Acting as your liaison and contact point with LFSA, arranging for interviews (if any).
- Tracking the license approval and handling all queries from LFSA.
- Advisory services on the appropriate company structure post-approval.
- Assistance in setting up onshore and offshore bank accounts.
- Assistance in establishing operational and marketing or co-located offices.
- Staff provision and office space rental.
- Internal audit and compliance advisory.