In this regard, the Labuan Financial Services Authority (Labuan FSA) had been playing a central role through its rigorous regulatory and supervisory measures, reinforcing the national AML/CFT/CPF framework within Labuan IBFC market. Among others, the MER highlighted Labuan IBFC’s effectiveness in its AML/CFT/CPF framework as follows:

• Sound understanding of risks: The report cited Labuan FSA’s sound understanding of Labuan IBFC’s money laundering risks with opportunities of being enriched to cater for a more sophisticated typology.
• Robust licensing, registration and other controls in place for Labuan trust company sector: The MER 2025 also positively described Labuan FSA’s licensing approach and its supervisory measures. The report cited “The robust licensing approach for Labuan trust companies is a positive aspect of Malaysia’s AML/CFT/CPF framework and is important given the significant role they play in preventing criminals and their associates’ involvement in Labuan FIs”. Given Labuan trust companies’ gatekeeper role, they are critical in preventing illicit parties from operating in or channeling illegitimate funds through the Labuan IBFC.
• Employment of Network Analysis to uncover nested relationship and ultimate beneficial: It was also mentioned that Labuan FSA employs sophisticated Suptech tool for on-boarding filtering process and its supervisory function. The MER 2025 cited “The Labuan FSA also conducts network analysis to establish links between beneficial owners (BOs) in multiple companies, based on the information held in its registry. This has helped supervisors uncover nested relationships, conduct risk-based sampling and identify possible ultimate BOs.”

Looking ahead, Labuan FSA would continue to work closely with Labuan financial institutions to fortify the AML/CFT/CPF regulations within Labuan IBFC. Priorities include deepening risk landscape insights, advancing risk-based supervision, strengthening beneficial ownership transparency, and sustaining alignment with evolving FATF standards. These initiatives reaffirm Labuan IBFC’s continuous commitment to remain as a credible, well-regulated, and resilient international financial centre, bolstering Malaysia’s integrity and standing in the global financial system.

For more details, the MER 2025 on Malaysia's measures AML/CFT/CP is available at https://www.fatf-gafi.org