09 October 2023 – The Labuan Financial Services Authority (Labuan FSA) hosted a cross-sectoral market briefing and roundtable discussion between Labuan banking institutions with Labuan insurers and captive owners on 5 October in Kuala Lumpur. The objective of the session was to impart general understanding of Labuan Protected Cell Companies (PCCs) in relation to their business structure and operations. This was intended to facilitate banking institutions’ onboarding and screening of PCCs for the purpose of opening of bank accounts.

More than 50 attendees participated in the roundtable session comprising representatives of the Labuan Compliance Officers’ Networking Group (Labuan CONG), the Labuan International Insurance Association (LIIA), Association of Labuan Banks (ALB), Malaysian banks, PCC owners and Bank Negara Malaysia.

Labuan captive and PCCs, both are unique business structures offered by Labuan International Business and Financial Centre (Labuan IBFC) and not available in the domestic. In fact, the Centre is the only market in Asia that has specific legislations that support PCC structure as a corporate vehicle. Many are not aware of its pecuniary nature and features, which may be due to limited understanding on Labuan PCCs and how they operate. In light of this, Labuan FSA has briefed attendees on the licensing procedures, regulatory requirements and supervisory oversight of Labuan PCCs. This includes aspects of anti-money laundering (AML) requirements which are also subjected to PCCs as Reporting Institutions under the laws. Labuan FSA emphasised that its prudential requirements and anti-money laundering/counter terrorist financing (AML/CFT) control measures for PCCs are comprehensive and comparable with those applied to other Labuan licensed financial institutions. This also include among others PCCs’ obligations on Customer Due Diligence (CDD), beneficiary ownership reporting and disclosures as well as suspicious transaction reportings (STRs) to relevant authorities. In addition, the LIIA representatives also explained on the typical business structures and operations of a Labuan PCC.

The Director General of Labuan FSA, Nik Mohamed Din said “The challenges in opening of bank accounts is a global issue that stemmed from the stringent requirements for due diligence process and adherence to know-your-customer rules for on-boarding of new customers in compliance with AML/CFT law”.

During the briefing, Labuan FSA officials also further emphasised that Labuan insurance sector, including Labuan captives, was rated “LOW RISK” by the National Coordination Committee to Counter Money Laundering (NCC) in the National Risk Assessment 2020 and Labuan Risk Assessment 2020. Labuan PCC are regulated, and supervised on an on-going basis similar to other Labuan financial institutions. We are optimistic that the roundtable dialogue would bridge the gap on the challenges of establishing banking relationships for PCC.

Nik Mohamed Din also said “The Labuan insurance captives including PCC is one of the key business focus areas under the Labuan IBFC’s 5-year Strategic Roadmap 2022-2026. Banking facilities and financial infrastructural support from Labuan and Malaysian banks play an important role in promoting intra-Labuan business.”


Labuan Financial Services Authority
09 October 2023