Why mid-east-based firms should consider setting up a financial services entity in Labuan (Malaysia)

In an increasingly competitive global financial environment, Middle-East headquartered firms seeking to expand their reach, diversify regulatory exposure, or capture growth from new jurisdictions should strongly consider the Labuan International Business & Financial Centre (Labuan IBFC) in Malaysia. Whether you are planning an investment bank, a securities/forex brokerage, or a money-brokerage arrangement, Labuan offers a strategic, efficient, Shariah-aligned gateway tailored to investors and companies from the Gulf region.

Key advantages for Middle East firms

1. Shariah-friendly / Islamic-finance legislation
Labuan IBFC has introduced legislation and regulatory frameworks that enable Islamic finance structures. For example, under the Labuan Financial Services Authority (Labuan FSA), licences are already being issued for Islamic digital banks pursuant to the Labuan Islamic Financial Services and Securities Act 2010 (LIFSSA).

For a Middle East firm that seeks to operate in accordance with Shariah-compliance, this gives confidence that the regulatory environment supports Islamic banking, digital-Islamic finance, and is effectively geared to international investors from majority-Muslim jurisdictions.

2. A jurisdiction proactively seeking Middle East / broader international investment
Labuan has publicly signalled its intention to attract fintech, digital assets, Islamic finance and “next generation” licensed entities. For example, as reported, the Labuan FSA granted conditional approvals to two Islamic digital banks under its sandbox regime - a clear indication of the centre’s willingness to host innovative, Shariah-aligned financial players.
For Middle East investors and firms, this means a regulator and jurisdiction that understands your market, wants your participation, and is flexible for growth-oriented models (including digital, cross-border, forex/brokerage activities).

3. Strategic benefits: cost, access, flexibility

• Setting up in Labuan gives access to Asia-Pacific markets (Southeast Asia, South Asia) while maintaining a time/zone advantage for Middle East firms.

• Regulatory cost and licensing structures in Labuan typically are more attractive and streamlined than some on-shore jurisdictions in the West or Middle East.

• There is good flexibility: whether you wish to operate as an investment bank, securities/forex broker, or money/FX broker - Labuan offers licensing categories that accommodate those models (with appropriate prudential/regulatory compliance).

• The “off-shore face” of Labuan allows your Middle East firm to maintain brand positioning, yet benefit from a respected international financial centre location in Malaysia.

4. Example of meaningful Islamic finance development

As noted above, the Labuan FSA conditionally approved two Islamic digital banks under its “i-BOX sandbox” framework.
This is a tangible example of how the jurisdiction is not only welcoming new licence-types but also expressly geared toward Islamic digital finance models. For a Middle East firm wishing to combine Islamic finance credentials + digital innovation + brokerage/investment-banking services, this is a particularly strong signal.

How Zitadelle Advisory Group AG can help you

At Zitadelle Advisory Group AG (“Zitadelle AG”), we specialise in assisting international financial services firms - including from the Middle East, Europe and Southeast Asia - to structure, license and operate in jurisdictions such as Labuan IBFC. Here is how we support you:

• Licence application and structuring: We assist you identify the optimal licence type (investment banking, securities trading broker, forex/money broker) under Labuan’s regulatory regime.

• Islamic finance alignment: We help ensure your corporate structure, business model, governance, and operations align with Shariah-compliance and Labuan’s Islamic finance framework.

• Regulator liaison and documentation: We prepare application packages, submit to Labuan FSA, and coordinate any required disclosures, governance frameworks, risk/AML policy, etc.

• Ongoing compliance and operations: Beyond licence issuance, we can support you with ongoing AML/CFT, regulatory reporting, director/resident requirements, and strategic rollout into the Asia-Pacific region.

• Tailored for Middle East firms: With our deep understanding of Middle East investor needs, regional time-zone advantages, and cross-border regulatory planning, we act as your partner to bridge the Gulf-Asia regulatory/business nexus.

Why now is an opportune moment

The global financial services landscape is shifting: digital assets, Islamic finance, cross-border regulation, and regional hubs are gaining greater significance. For Middle East firms looking to diversify away from saturated home markets and capture growth, entering Labuan provides a springboard into Asia and beyond - under a jurisdiction that both embraces Islamic finance and seeks international investor participation.

Conclusion

If your firm is based in the Middle East and you are exploring a financial services licence, be it an investment banking entity, a securities or forex broker, or a money-broking operation - setting up in Labuan offers compelling benefits. Shariah-compliant legislation, a welcoming regulator, strategic location and cost advantages all converge.
At Zitadelle AG we stand ready to assist you in navigating this process seamlessly, so you can focus on building your business rather than grappling with jurisdictional complexity.