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A Labuan offshore company is granted the status of a Malaysian non-resident for Malaysia Exchange Control purpose.[1] Thus it can open foreign currency accounts with any banks, in Malaysia or abroad. Generally a Labuan offshore company can open bank accounts with the following;

1) offshore banks in Labuan (foreign currency accounts only)

2) branch of a domestic bank in Labuan (foreign currency accounts and Ringgit account)

3) branch of a domestic bank in Kuala Lumpur or other cities in Malaysia (foreign currency accounts and Ringgit account)

4) any banks anywhere in the world (foreign currency accounts only)

It is common for Labuan offshore companies to open accounts with a branch of a domestic company in Labuan. Among the reasons are:

1. low initial deposit of around US$5,000 as opposed to at least US$25,000 for offshore banks,
2. account with Internet access,
3. Ringgit account can be opened where Ringgit can be used to meet expenses;
4. corporate credit cards can be obtained, and
5. unlike offshore banks, a branch of a domestic bank has retail outlets which is more convenient.

It is also quite common for Labuan companies to open bank accounts with offshore banks in Labuan. However, whilst there are more than fifty offshore banks in Labuan, not all facilitate the opening of bank accounts. Often the minimum initial deposit is high and the lack of internet banking is a limiting factor. In addition the offshore banks are not by nature retail banks so opening bank accounts is not its main activity.

While a Labuan offshore company may open a bank account with any bank anywhere in the world, this is not a common occurrence. Most likely, this is based on the strength of a client’s existing relationship with a bank overseas.

It is not very common for an offshore company to operate a bank account with a branch of a domestic bank in, say, Kuala Lumpur. This has nothing to do with law or policy but rather the lack of understanding on the part of the local banks regarding structure and the compliance aspect of an offshore company. Many local bankers may hesitate which can delay or sometimes frustrate an applicant. The number of Labuan offshore companies that have opened bank accounts with domestic banks in Kuala Lumpur or other cities in Malaysia is not significant and if they do open an account, it is largely due to the strength of a client’s existing relationship.

The requirements when opening a bank account vary from one bank to another, but generally banks will require the following information and documents from applicants:

1. what currency the bank account is to be in
2. the name of the authorised signatories and the mode of signing,
3. passport copies verified by a bank officer,
4. residential address and proof of residence which is normally in the form of recent bank or credit card statement or utility bill,
5. curriculum vitae or resume of all directors, signatories, shareholders and beneficial owners
6. countries from which the remittances are expected;
7. countries in which funds are transferred to;
8. the offshore company’s profile which can shed light on the company, the nature of its business, sources of funds, expected sales level, evidence of business and purpose of account should be provided to the bank. These include company/product brochure, budget, financial statements, catalogue, invoice, print-out of website, etc. to nature of business stating company profile or write-up of the company business;
9. anticipated annual gross sales;
10. list of counter-parties

The following are the most common corporate documents to be submitted by an offshore company;

a) certified true copies of Form 7 Certificate of Incorporation

b) certified true copies of Form 14 Return of Allotment of shares

c) certified true copies of Form 20 Notice on Situation of Registered Office

d) certified true copies of Form 22 Particular of Directors and Officers

e) certified true copies of Memorandum & Articles of Association

f) Letter of Information from LOFSA or Letter of Good Standing

Note that opening an offshore bank account is rather cumbersome now. However whichever bank is chosen, the trust company should be able to guide the applicant and make known exactly what information and documents are required.