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Labuan FSA Issues Revised Directive on Islamic Financial Business in Labuan IBFC
Labuan FSA has revised the Directive on Islamic Financial Business in Labuan IBFC, which supersedes the earlier Directive that was issued on 1 October 2003 under the previous Labuan Offshore Financial Services Authority Act 1996, now renamed as the Labuan Financial Services Authority Act 1996.
Consequently, the update to the current Directive deletes all reference to the term “offshore”.
Corresponding to the Labuan Islamic Financial Services and Securities Act 2010, the Directive makes distinction and allows the option for either the establishment of Internal Shariah Advisory Board (previously the Shariah Supervisory Council) or appointment of Shariah Adviser.
Below is the comparison table:
Previous Directive (October 2003)
New Directive (August 2013)
Any Offshore Financial Institution (OFI) intending to carry out Islamic financial business is required to:
  1. Establish its own Shariah Supervisory Council (SSC); or
  2. Engage the services of an existing SSC in the market, including the SSC of the International Islamic Financial Market (IIFM) to ensure compliance with Shariah principles.
Any Labuan Financial Institution (LFI) intending to carry out Islamic financial business is required to:
  1. Establish its own Internal Shariah Advisory Board (IASB); or
  2. Appoint a Shariah Adviser (SA); or
  3. Engage the services of an existing Shariah Advisory Firm in the market, including the Shariah Advisory Panel of the International Islamic Financial Market (IIFM) to ensure compliance with Shariah principles.

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