Labuan corporate bank account opening

Labuan corporate bank accounts in 2024

Since 2003, Healy Consultants Group helps multi-national Clients open multi-currency corporate bank accounts in Labuan for both local and overseas companies.

Without bank signatory travel, our team will project manage the multi-currency corporate bank account opening process, including preparing a quality business plan for our Client’s business.

We recommend our multi-national Clients read this web page to avoid bank surprises later!

Labuan banking problems and solutions

No	Potential Labuan banking problems	Healy Consultants Group solutions
1.	A Labuan corporate bank account does not look good to international banks, governments, customers and suppliers. Consequently, third parties may feel uncomfortable receiving or sending funds from or to a Labuan bank account.	For your Labuan LLC, Healy Consultants Group will open a multi-currency corporate bank account in Singapore, Hong Kong, the USA or the EU.
2.	Bank insists the bank signatory travels to Labuan for a one-hour interview.	Healy Consultants Group’s Client travel policy applies. Our staff will organise the bank meeting in our Labuan affiliate’s office and assist our Client during the bank interview(s).
3.	Global banks continue to tighten corporate bank account opening procedures, and their internal compliance departments are completing more thorough due diligence of Clients. Consequently, our Clients should expect Labuan bank account approval to take up to four weeks. It is common for Labuan banks to close corporate bank accounts without giving an open, transparent reason to their customers. To close a customer bank account without giving the bank signatory an opportunity to explain ‘unusual transactions activity in the corporate bank account’ is an unfair, unreasonable action which places our multi-national Clients’ businesses under stress. As we advance deeper into a global depression, it will become more common for banks to experience financial difficulties. Consequently, multi-national Clients should expect i) small banks to go bankrupt and ii) small to medium-sized banks to be bought over by top tier banks. The number of banks operating in each country will get smaller, exposing our multi-national Clients to financial risk.	If our Client requires a bank account at short notice, we recommend an immediate Labuan solution plus already-approved international corporate bank account. We recommend our multi-national Clients open multiple multi-currency corporate bank accounts for their entity. It is unwise to open one corporate bank account and have your business be dependent on one bank. For each entity, we recommend our multi-national Clients open multiple multi-currency corporate bank accounts across multiple countries. Spread your funds across multiple corporate bank accounts in multiple top-tier banks in multiple different countries. Avoid small banks including PSPs, FSPs and digital banks. Ensure each bank offers customer deposit insurance.

Potential Labuan banking problems

Healy Consultants Group solutions

A Labuan corporate bank account does not look good to international banks, governments, customers and suppliers. Consequently, third parties may feel uncomfortable receiving or sending funds from or to a Labuan bank account.

For your Labuan LLC, Healy Consultants Group will open a multi-currency corporate bank account in Singapore, Hong Kong, the USA or the EU.

Bank insists the bank signatory travels to Labuan for a one-hour interview.

Healy Consultants Group’s Client travel policy applies. Our staff will organise the bank meeting in our Labuan affiliate’s office and assist our Client during the bank interview(s).

Global banks continue to tighten corporate bank account opening procedures, and their internal compliance departments are completing more thorough due diligence of Clients. Consequently, our Clients should expect Labuan bank account approval to take up to four weeks.

It is common for Labuan banks to close corporate bank accounts without giving an open, transparent reason to their customers. To close a customer bank account without giving the bank signatory an opportunity to explain ‘unusual transactions activity in the corporate bank account’ is an unfair, unreasonable action which places our multi-national Clients’ businesses under stress.

As we advance deeper into a global depression, it will become more common for banks to experience financial difficulties. Consequently, multi-national Clients should expect i) small banks to go bankrupt and ii) small to medium-sized banks to be bought over by top tier banks. The number of banks operating in each country will get smaller, exposing our multi-national Clients to financial risk.

If our Client requires a bank account at short notice, we recommend an immediate Labuan solution plus already-approved international corporate bank account.

We recommend our multi-national Clients open multiple multi-currency corporate bank accounts for their entity. It is unwise to open one corporate bank account and have your business be dependent on one bank.

For each entity, we recommend our multi-national Clients open multiple multi-currency corporate bank accounts across multiple countries. Spread your funds across multiple corporate bank accounts in multiple top-tier banks in multiple different countries. Avoid small banks including PSPs, FSPs and digital banks. Ensure each bank offers customer deposit insurance.

The Labuan banking sector
Healy Consultants Group’s summary view:
- Labuan is a territory of Malaysia. Therefore, the banking system in Labuan is subject to the same regional and global forces as the wider Malaysian banking system. As a result, we recommend multinational Clients currently minimise funds held with a Labuan or Malaysian bank.
- That said, Malaysia has a well-regulated banking and financial system. Like other states in Malaysia, Labuan banks are governed by Bank Negara Malaysia, the central bank, which has a reputation for maintaining the stability of the Malaysian ringgit currency, as well as the country’s banking sector.
- Labuan banks are conservatively run, with a minimum capital adequacy ratio of 8% maintaining the legal minimum requirement. Bank failures are rare in Labuan.
- Labuan banks enjoy a moderate long-term credit rating of BBB+. Consequently, we estimate the probability of a bank default is 25% during a global recession.
- A key risk factor for Labuan banks includes large falls in net profits and margins. Because of the unstable economic environment, more banks will suffer from i) bad debts as customers default on payments ii) personal and business consumers holding back on taking out loans and other bank products because of job insecurity and bankruptcies and iii) low interest rates.
- Because of the above, as banks looks to cut costs, more bank branches are expected to close in Labuan and services move online.
- Alternatively, some Malaysian banks will merge in the current environment. In practical terms, this is likely to lead to stronger bank balance sheets, greater bank liquidity and enhanced financial sector stability.
- However, the Malaysian economy is estimated to expand as much as 7.5% in 2021. If that happens, bank risk factors diminish. Demand for products like mortgages and small business loans increases.
- Like Malaysia at large, Labuan is at risk of being viewed as a high risk money laundering destination.
- Positively, bank deposits in Malaysia (including Labuan) are protected by law up to an equivalent value of RM250,000 per depositor, per bank, including both principal and interest. This applies to deposits in any currency. Although Malaysia banks rarely fail, the protection scheme provides another layer of comfort for multinational investors.
- Digital banks are licensed to operate in Malaysia since 2020. These ‘virtual banks’ are an excellent alternative to conventional banks, with a similar range of services accessed via an app and lower account service fees.
Key information on the Labuan banking sector
- The Central Bank of Malaysia (BNM) licences, regulates and supervises Labuan banks. In 2021, there are 35 offshore banks, eight Malaysian-owned banks, and 27 foreign-owned banks licensed in Labuan. These include JP Morgan Chase Bank, HSBC and First Abu Dhabi Bank.
- Banks in Labuan typically offer i) multi-currency accounts ii) online and phone banking iii) checking and savings accounts iv) debit and credit cards v) fixed term deposits and vii) wealth management services.
- For multicurrency corporate bank account opening, we recommend OCBC Malaysia.
- If the Labuan entity has only one director, Labuan banks will usually request for resolution of sole director of the company before processing the bank account opening application.
- In addition, Labuan banks can be reluctant to open corporate accounts for companies with complex structures involving multiple foreign beneficial owners. To increase account opening success, we recommend our Client keep the corporate structure simple.
- Unless the documents are in English or Malay, there is a chance that the bank will request the attested documents be translated by a legal translator. Clients should factor possible additional translation costs into the engagement.
- Normally, it is not necessary for our Client to visit Labuan to open the bank account. Our agents will courier all documents to our Client for signature. Healy Consultants Group can obtain online banking approval within four additional weeks. However, there is a 30% chance the bank will require our Client to travel for an interview.
- Most banks in Labuan require an initial minimum deposit of US$10,000 to US$50,000. It is advisable to maintain at least US$10,000 in the account.
- All Labuan banks e-banking and phone assistance is available in English and Malay.
- There are ATMs across Labuan. Contactless payments are common across the territory, even for small transactions.
- Healy Consultants Group can also assist our Client to open a Labuan corporate bank account for a financial services company including FOREX businesses within 6 weeks. Internet banking approval to follow within 4 weeks.
- Labuan is a signatory to the Common Reporting Standard (CRS) global information exchange system, as well as FATCA reporting protocols. Labuan banks therefore share details of accounts held, controlled or beneficially-owned by foreign residents, with other banks and governments around the world, including the US Inland Revenue Service (IRS).
- Labuan International Business and Financial Centre (Labuan IBFC) implemented international standards such as Anti-Money Laundering Act (AMLA) legislation, Base Erosion and Profit Shifting (BEPS) and economic substance requirements.

Conclusion

Labuan multi-currency corporate bank account opening is easy if you know how. Contact Healy Consultants Group if your Firm needs assistance navigating through the different banking solutions.