The regulatory reforms by Labuan FSA were implemented through a phased-in approach, beginning with the rollout of Basel II and selected Basel III components for the Labuan conventional banks in 2018. The enhanced BCAF rolled out end-2025 now has been expanded to cater both conventional and Islamic banks whilst fully incorporating Basel III regulations. The framework also provided a level regulatory footing by applying consistently the new requirements to Labuan IBFC’s commercial banking as well as investment banking segments.

 
“By adopting Basel III, Labuan FSA is strengthening the foundation of Labuan’s banking system and aligning it with globally recognised standards,” said Affendi Rashdi, Director General of Labuan FSA.

The Director General added, “A strong capital framework is fundamental to banking resilience. The enhanced BCAF strengthens capital quality, sharpens financial risk governance and supports more forward-looking capital planning across Labuan banks”.

 
From a systemic perspective, the strengthened framework encourages prudent balance sheet management and disciplined risk-taking, enabling Labuan banks to navigate evolving market headwinds with greater confidence while contributing to the overall stability of Labuan IBFC’s financial ecosystem.

 
Labuan IBFC’s adoption of Basel III is timely and in tandem with the regulatory efforts of other renowned international financial centres including Guernsey, Jersey and Cayman Islands in the European and Caribbean regions. The latter markets have initiated similar banking capital enhancements and actively transitioning toward adopting Basel III framework. The rollout of the enhanced BCAF is expected to further bolster confidence among investors, counterparties and market participants; reinforcing Labuan IBFC’s standing as a credible jurisdiction for international banking activities.

 
The Director General concluded, “Through the enhanced BCAF, Labuan IBFC is not only keeping pace with global regulatory developments, but it is also positioning the Centre as a trusted, competitive and future-ready international financial centre for quality banking business.”