LABUAN, 11 September 2024 – Taking cognisant of the growing prominence of money broking business in the Labuan IBFC, the Labuan Financial Services Authority (Labuan FSA) has issued a revised Guidelines on Labuan Money Broker Business in Labuan IBFC. The enhancement is to strengthen the regulatory framework governing the money broking business, which is in line with Labuan FSA’s move towards promoting greater governance and safeguarding investors’ interest in response to the fast-evolving financial landscape driven by greater digitalisation of financial services.

Key aspects where regulations have been fortified to mitigate potential new and emerging risks, include the following six critical areas:

1. Strengthening the Eligibility Criteria: To provide greater clarity on the licensing requirements and ensure that only qualified entities operate within the jurisdiction.
2. Clarifying on Permissible Activities: To provide clarity on the definition of permissible activities under the Labuan money broker (LMB) licence, thus reducing ambiguity. The defined scope of activities also provide clarity for embracing digital technologies to further drive fintech innovation.
3. Strengthening Compliance Measures: To incorporate the enhanced Anti-Money Laundering and Counter Financing of Terrorism frameworks in the Guidelines to ensure that LMB operations adhere to international standards, thereby safeguarding the financial system from illicit activities.
4. Enhancing Regulatory Oversight: To implement a more robust monitoring mechanism, including stringent audit and reporting requirements, to effectively oversee the activities of the Labuan MBs.
5. Enhancing Client Protection Mechanisms: To introduce greater transparency and disclosure requirements, along with improved dispute resolution mechanisms, to better protect the interests of clients.
6. Improving Risk Management Framework: To mandate comprehensive risk management frameworks aimed at preventing potential financial misconduct and fraud, while promoting greater accountability among stakeholders.

The enhancement of the money broker guidelines is timely in addressing challenges associated with the rise in complexities introduced by evolving business models in the digital financial sectors. Similar to Labuan IBFC, many international jurisdictions are also tightening their regulations to conform with global standards set by international standard-setting organisations such as the Financial Action Task Force (FATF), International Organisation of Securities Commissions (IOSCO), and the International Monetary Fund (IMF).

The Director General of Labuan FSA, Mr. Nik Mohamed Din Nik Musa said, “Key challenges need to be addressed, like regulation of sophisticated products and the need to oversee the market stability and investors’ protection in the Labuan IBFC. Thus, Labuan FSA is committed to continually enhancing its regulatory framework, ensuring that Labuan IBFC offers a secure, competitive, and attractive environment for global businesses.”

Further details of the revised Guidelines on Labuan Money Broker Business in Labuan IBFC can be downloaded here (https://www.labuanfsa.gov.my/legislation-guidelines/guidelines/other-businesses)


Labuan Financial Services Authority
11 September 2024