Labuan FSA's outgoing chief reflects on challenges, reforms during tenure
Appointed on May 1, 2021, Nik Mohamed Din assumed the leadership of Labuan FSA at the height of the COVID-19 pandemic, a time when global markets were in turmoil and international financial centres, like Labuan International Business and Financial Centre (IBFC), were grappling with severe business disruptions.
Sharing his thoughts after the unveiling of the Labuan IBFC Market Report today to the media and industry players, he said the pandemic brought immediate operational and economic consequences.
"Movement restrictions disrupted business activities and forced employees into remote work arrangements, while critical systems went offline, affecting the timely submission of regulatory data, compliance reports, and business operations.
"Labuan IBFC saw a notable decline in trading and financial activities, and several trading enterprises were delisted, thereby losing their eligibility for the centre's attractive three per cent tax incentive," he said.
Nik Mohamed Din said that despite these setbacks, Labuan FSA acted swiftly and decisively, and through direct engagement and communication with affected stakeholders, the authority clarified compliance expectations and took steps to restore confidence.
"The jurisdiction successfully reinstated numerous entities back into the qualifying list, preserving the integrity and competitiveness of Labuan's tax framework.
Nik Mohamed Din remarked that the crisis, while challenging, also offered valuable lessons.
He reflected that every crisis brings with it something worth learning, and that mindset paves the way for deeper institutional reflection.
"It was during this period that the idea of a long-term strategic roadmap took shape, and with operations scaled down and more time to deliberate, Labuan FSA's leadership and staff developed a clearer vision for the future.
He said this led to the creation of the Labuan IBFC Strategic Roadmap 2022-2026, which focuses on strengthening niche financial sectors, including captive insurance, Islamic finance, digital financial services, and environmental, social, and governance (ESG)-aligned investment structures.
"The roadmap was a turning point for Labuan IBFC's forward positioning in an evolving global financial ecosystem," he said.
Nik Mohamed Din said another major challenge under his leadership was the mutual evaluation by the Financial Action Task Force (FATF), the global watchdog for anti-money laundering and counter-terrorism financing standards.
He said the FATF has the authority to downgrade jurisdictions that fail to meet its stringent Anti-Money Laundering/Countering Financing of Terrorism (AML/CFT) standards, an outcome that could significantly harm a country's international credibility and foreign direct investment inflows.
"Recognising the gravity of this risk, Labuan FSA committed substantial resources and undertook multiple assessments to align the centre's regulatory standards with international expectations," he said.
Nik Mohamed Din said that the team had "burned the midnight oil" to ensure that Labuan stayed on track and did not fall short of global benchmarks.
He said that in response to the FATF's evaluation framework and in a bid to future-proof Labuan's regulatory infrastructure, the Labuan FSA introduced critical legislative reforms in December 2024.
Four core business laws were amended, namely the Labuan Business Activity Tax (Amendment) (No. 2) Bill 2024, the Labuan Companies (Amendment) Bill 2024, the Labuan Trusts (Amendment) Bill 2024, and the Labuan Foundation Law (Amendment) Bill 2024.
These amendments were designed to enhance tax administration, improve corporate transparency, and tighten governance mechanisms within Labuan's financial services ecosystem.
"Through these reforms and strategic efforts, Labuan FSA not only restored momentum within Labuan IBFC but also repositioned the jurisdiction as a forward-thinking and fully compliant international financial centre," he said.
Several industry players said Nik Mohamed Din's term was marked by a philosophy of adapting to adversity and transforming crises into opportunities.
They said that as he retires today, the impact of his leadership is evident in the strengthened regulatory framework, enhanced international credibility, and a clearer long-term vision for Labuan IBFC.
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