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