In a regulatory opening address at the Asia Fintech Forum 2026, Labuan Financial Services Authority Director-General Affendi Rashdi outlined the authority’s approach to AI, digital assets and other technology driven financial services. Regulation should focus on the risks and impact of the underlying activity rather than create separate rules for each technology, with equivalent risks receiving equivalent regulatory attention and supervisory intensity calibrated to an activity’s size, complexity and interconnectedness. Labuan International Business and Financial Centre applies this approach through phased digital finance regulation and a regulatory toolbox that allows new business models to be considered within existing licensing frameworks, subject to tailored safeguards. Governance, consumer protection, market conduct and financial integrity standards remain central. Institutions are expected to maintain effective controls against digital financial crime, particularly through continuous sanctions screening, scrutiny of beneficial ownership structures and early escalation of red flags, while using AI, regulatory technology and blockchain analytics to support rather than replace compliance judgment. The authority is also continuing to strengthen supervision through its Supervisory Intelligence System, a standardized platform for regulatory applications and submissions covering areas including compliance, audit, anti-money laundering and counterterrorist financing, Shariah requirements and electronic know your customer reporting. The wider Labuan digital ecosystem includes digital asset exchanges, tokenized fundraising and the Islamic Digital Asset Centre, which covers Shariah compliant securities tokens and other Islamic digital finance initiatives.

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