Getting a Forex License in Labuan

The Labuan forex license, regulated under the Labuan Financial Services and Securities Act 2010, Labuan Companies Act 1990, and Labuan Business Activity Tax Act 1990, authorizes intermediaries to facilitate deals in money or forex markets for a brokerage fee. However, it excludes direct currency trading activities.

Advantages of Obtaining a Labuan Forex License

  1. Exclusive ownership without the need for local partners.
  2. Competitive corporate tax rate at 3% on trading profits.
  3. No withholding tax on management fees, royalties, or interests.
  4. Freedom from currency restrictions.
  5. Exemption from stamp duties and Goods and Services Tax (GST).
  6. Import duties are not applicable.
  7. No taxation on capital gains and dividends.
  8. Access to a network of more than 70 tax-treaty countries.
  9. Eligibility for a 24-month offshore broker work visa, renewable.

Qualification Criteria for a Labuan Forex License

Applicants must meet specific criteria set by the Labuan International Business and Financial Centre (IBFC) to be eligible for a forex license Labuan:

  • Demonstrate a solid track record and at least three years of experience in money broking.
  • Operating as a regulated money broker or similar service provider in other jurisdictions with proven success.
  • Be a licensed institution under the Malaysia Financial Services Act 2013 or an already-approved money broker.

Labuan Financial Services Authority (LFSA) Requirements

  1. Obtain initial approval from LFSA with a detailed business plan, company profile, and relevant documents.
  2. After LFSA’s approval, officially incorporate the company to be eligible for the brokerage license in Labuan.
  3. Submit a comprehensive application to LFSA
  • A three-year business plan with financial forecasts and marketing strategies.
  • Profiles of directors and shareholders.
  • The most recent two years’ audited financial statements (if applicable).
  • Documentation for Know Your Customer (KYC), Anti-Money Laundering Act (AMLA), and operational guidelines.

Forex License in Labuan and Vanuatu

A list of essential conditions is required to obtain a forex license in Labuan, including a minimum capital of 500,000 Malaysian ringgit and a physical office. In addition, it is important to strictly comply with the compliance criteria for key personnel, as well as partnerships limited to international organizations under regulation at the inter-industry level. Strict control over internal policies, including a special mandate for Islamic money brokerage services, is worth highlighting.

A local office and a minimum capital of 50,000 US dollars are also important when considering Vanuatu for obtaining a license. The company’s founders must be of proven financial literacy and integrity, providing comprehensive documentation emphasizing their well-being. The requirements also include a viable three-year business strategy and strict compliance with anti-money laundering and counter-terrorist financing laws.


The Labuan International Business and Financial Centre (IBFC) outlines specific requirements for obtaining a brokerage license in Labuan, which include:

  • A minimum paid-up capital of RM500,000 or its equivalent in any foreign currency, subject to adjustments based on the business’s nature and complexity.
  • A physical, furnished operational office in Labuan; virtual offices are not permitted.
  • Compliance with the Labuan FSA’s Guidelines on Fit and Proper Person Requirements by shareholders, directors, principal officers, and any other involved individuals.
  • Partnership only with entities regulated by internationally recognized regulatory authorities.
  • A leverage limit of 100:1 for client trades, necessitating at least a 1% margin deposit for trade positions.
  • Implementation and regular review of adequate internal policies and procedures covering operations, compliance, internal controls, corporate governance, and risk management in technology and cybersecurity.
  • For those offering Islamic money broking services, appointment of a qualified person to an internal Shariah Advisory Board is mandatory, following the Directive on Islamic Financial Businesses.

Step-by-step Guide for Obtaining a Forex License in Labuan

Stage 1. Company Registration

  • Complete registration within two weeks.
  • Issue Certificate of Incorporation and essential corporate documents.

Stage 2. Preparation of Business Documentation

  • Draft a detailed business plan on company operations and strategies.
  • Develop AML/CFT procedures and internal policies covering technology risk management, corporate governance, and regulatory compliance, typically within three weeks.

Stage 3. Economic requirements

  • Prepare a lease agreement following local law, providing a furnished office in the central business district of Labuan.
  • Hire at least two qualified staff members. Their responsibilities should include conducting initial screening, interviewing, and signing employment contracts under the laws of the Republic of Labuan.

Stage 4. Financial obligations

Annual operating expenses — at least RM100,000 to cover rent and salaries.

Stage 5. Compliance and Due Diligence

Assist directors and key personnel in attaining ‘fit and proper’ status with enhanced KYC documentation.

Stage 6. License Application and Approval

  • Apply for the broker license Forex Labuan with FSA, including possible interviews and fulfillment of additional requirements.
  • Open a local bank account and deposit initial paid-up capital, possibly requiring travel to Labuan.
  • Upon meeting all conditions, Labuan FSA will grant the full Labuan money broking license.

Tax Benefits of a Labuan Forex License

Getting a forex license in Labuan offers significant tax advantages:

  • No withholding tax on dividend and interest payments.
  • Exemption from import duties, sales tax, and capital gains tax.
  • Absence of foreign exchange controls.
  • Access to double taxation agreements with over 70 jurisdictions.

It is important that there is a preferential rate of 3% on all audited net income for Labuan companies in the brokerage field. Thus, this country is very attractive for establishing a forex brokerage company.


Can my Labuan forex brokerage company operate with Malaysian residents?

Absolutely, entities holding a Labuan forex license are authorized to carry out transactions with Malaysian residents, including citizens, permanent residents, and businesses operating in Malaysia.

Do Islamic forex broking operations in Labuan have additional requirements?

Yes, operations dedicated to Islamic forex broking must include a qualified individual on their Shariah advisory board to oversee adherence to Shariah laws.

What information must Labuan forex brokers disclose to clients?

Brokers are obliged to list authorized brokers publicly, detail relevant risks, spreads, and transaction fees, and issue monthly trading performance reports, either manually or via their platform.

Which types of businesses are not required to secure a Labuan forex license?

Entities that primarily invest their funds or distribute profits to investors are not mandated to obtain a license.

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