The Labuan Financial Services Authority (“LFSA”) issued a circular on 22 November 2023, announcing an extension of regulatory reliefs for Labuan international commodity trading companies, Labuan digital banks, and Labuan protected cell companies until 31 December 2023.
 
Through a circular issued on 29 November 2023, the LFSA has further extended the regulatory relaxation for Labuan international commodity trading companies and Labuan digital banks until 31 December 2026.
 
The following provides an overview of the relaxation of regulatory and operational requirements.

Labuan international commodity trading companies (“LITC”)

According to paragraph 6.10.1 of the Guidelines on the Establishment of Labuan International Commodity Trading Company under the Global Incentives for Trading Programme, LITCs are required to achieve a minimum annual turnover of USD50 million.
 
The minimum annual turnover has been adjusted as follows:

(a) USD25 million for petroleum and petroleum-related products (including liquefied natural gas); and

(b) USD10 million for other than petroleum and petroleum-related products (including liquefied natural gas)

Labuan digital banks

Pursuant to paragraph 5.1 of the Labuan Digital Banking Framework, digital banks are required to maintain a minimum capital unimpaired by losses of at least RM200 million or its equivalent in any foreign currency.
 
The minimum capital requirement has been reduced to RM50 million or its equivalent in any foreign currency unimpaired by losses.
 
Additionally, under paragraph 5.2 of the Labuan Digital Banking Framework, digital banks are required to place a non-interest bearing security deposit with the LFSA amounting to RM5 million or its equivalent in any foreign currency.
 
This deposit, refundable after three years from the date of placement subject to performance assessment of the digital bank over a period of three years, has been reduced to RM2.5 million.
 
Please do not hesitate to contact us for further clarification or assistance.

The information provided is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.