Forex Licensing - Labuan

About Labuan

Labuan is a well-known offshore financial centre that provides a variety of financial services, including forex trading. The Labuan Financial Services Authority (LFSA) regulates the licencing and regulating of forex brokers and other financial service companies in the jurisdiction.

The favourable regulatory environment is one of the primary advantages of obtaining a forex licence in Labuan. The LFSA has built a strong regulatory framework that is in line with international standards and best practises, including the International Organisation of Securities Commissions (IOSCO) principles.

Labuan is a federal territory off the northwest coast of Borneo, north of Brunei Bay, and faces the South China Sea. It is made up of the main island of Pulau Labuan as well as six smaller islands. It is located at 05 latitude North and 115 longitude East, about 10 kilometres southeast of the East Malaysian state of Sabah and 25 kilometres north of Brunei. The Federal Territory of Labuan is 92 km2 in size, while the main island is 75 km2. The island is mostly flat and sloping, with the highest point reaching only 85 metres.

Labuan grew at a yearly rate of 1.39%, from 77.8 thousand in 2002 to 100.1 thousand in 2021.

Labuan’s official language is Malay, which is also Malaysia’s national language.

On June 10, 2022, the Labuan Companies (Amendment) Act 2022 went into effect. These new modifications align Labuan’s establishment, registration, and management of Labuan corporations with Malaysian domestic and international norms.

Following recent changes in the regulatory regimes of more reputable jurisdictions, the Labuan Forex Licence has gained a lot of respect.

A money broking licence, overseen by the Financial Services Authority (Labuan FSA), the arm of the Labuan International Business and Financial Centre (IBFC), allows a Forex Broker to operate continuously within a low tax regime, limited restrictions in the corporate structure, and a relatively quick setup.

Gov. Capital Req. Timing Tax Rate
$120,000 4 months 3 %
  • Foreign directors are exempt from paying any taxes on their director’s fees.
  • There is no tax on dividends paid to shareholders.
  • Optional 2-year multiple entry working visa (renewable)
  • 100% foreign ownership, with no requirement for a Malaysian local partner
  • A company tax of 3% is levied on trading profits.
  • There is no withholding tax on interest, management fees, royalties, or technical fees.
  • No foreign exchange regulations
  • There is no Stamp Duty or GST.
  • There is no import duty, sales tax, or service tax
  • There is no Capital Gains Tax or Inheritance Tax
  • Access to more than 70 Malaysian tax treaty partners.
  • 50% tax exemption for expatriate professionals/managers
License: Money Broking License
Timeframe for Approval: 4 to 5 months
Regulator: Labuan FSA or LFSA (Labuan Financial Services Authority)
Authorised Activities: Forex, Banking, Insurance, Fund Management, Trust Services, Trading, and Leasing
Corporate Structure: Labuan Company, Labuan International Company ( LIC), Branch office, and Representative Office
Corporate Tax Rate: 3%
Currency: RM
Capital Requirement: Approx. $120,000
Paid-up Capital: Approx. $130 000
Economic Support: The government and regulatory authorities in Labuan strongly encourage forex licencing, with a variety of programmes and support services in place to promote the growth and success of the financial services industry.
Local Director/s: At least two directors (can only be natural person, no nationality or residency restrictions)
Local Shareholder/s: Only one shareholder (can also be a legal person, no nationality or residency restrictions)
Local Registered Officer: Required
Local Staff: Required
Compliance Officer: Required
AML/KYC: Required
Audit: Required
Main Benefits: Tax rates are low
A regulatory structure that is adaptable
A favourable business climate
Gaining access to international markets

The steps that follow will be taken in order to receive a licence:

  1. Document gathering and preparation for initial verification
  2. After the verification is completed and the initial paperwork is completed, the originals must be couriered.
  3. Other pertinent documents should be provided to the LFSA in response to their requests.
  4. The licence application will be processed by the LFSA.
  5. LFSA will issue conditional clearance so that you have ample time (typically 3 months) to:
  • Meet the company’s capital requirements (500 000.00 RM). You can use the funds for the company’s operator once the capital is deposited.
  • Locate and set up an office.
  • Request a phone number.
  • Locate a local employee.
  • Comply with any further requests.

In addition to forex licencing, Labuan provides a wide range of financial services, which include:

  • Financial Services
  • Services for Insurance and Reinsurance
  • Services for Fund Management
  • Services of Trust
  • Services for Wealth Management
  • Services for Islamic Finance


  • Notarised copy of Passport
  • Recent government Utility Bill (water, electricity – no older than 3 months)
  • Reference letters for Shareholder(s) and Directors from a Bank and a CPA
  • Bank statement not older than 3 months, confirming the funds required for the capital requirements (RM 500,000 equivalent to approximately $125,000)
  • A certified copy of Academic qualifications (true copy stamp from the university/college is enough) for Shareholder(s) and Directors

Important note:

The documents must be in the English language – if they can’t be provided in their original form in English, a notarized English translation must be sent as well.


  • Form a worldwide business corporation
  • Creating and revising shareholder and officer agreements
  • Planning and writing a narrative business strategy
  • Current financial statement preparation and drafting.
  • Prepare and draw three-year financial predictions
  • Creating and preparing personal financial statements for owners
  • Application preparation and submission to the appropriate regulatory authority.
  • Preparation and preparation of regulatory authority answers
  • Identifying and hiring an auditor and a currency prime broker
  • Make it easier to open bank accounts and payment processors.
  • Creating and revising AML/KYC policies and procedures
  • Client agreement and disclosure preparation and drafting

1. Establish international business corporation.
2. Preparation and drafting of shareholder and officer agreements.
3. Preparation and drafting of narrative business plan.
4. Preparation and drafting of current financial statements.
5. Preparation and drafting of 3 years financial projections.
6. Preparation and drafting of personal financial statements for owners.

7. Preparation and submission of application with appropriate regulatory authority
8. Preparation and drafting of responses to regulatory authority
9. Identification and engagement of auditor and forex prime broker.
10. Facilitate opening of bank accounts and payment processors.
11. Preparation and drafting of AML/KYC policies and procedures.
12. Preparation and drafting of client agreements and disclosures.