Labuan Money Broking License

Labuan Forex License

Labuan Forex Broker

Labuan is a federal territory of Malaysia, located off the northwest coast of Borneo in the South China Sea. It consists of the main Labuan Island and six smaller islands. Labuan is known for its status as an international offshore financial center and business hub. As a federal territory of Malaysia, Labuan is under the sovereignty and governance of the country much like Kuala Lumpur. As a federal territory, Labuan enjoys a special administrative status within the Malaysian federation.

Labuan Taxation

Notably, Labuan has its own taxation framework, which includes tax incentives for offshore companies and financial services. This unique tax structure allows Labuan to attract foreign investment and businesses seeking favorable tax treatment.

One of the main advantages of conducting business in Labuan is the favorable tax rates. Currently, taxes on income sourced in Labuan are:

  • For Labuan companies engaged in trading activities: A flat tax rate of 3% on audited net profit or a fixed amount of RM 20,000, whichever is higher.
  • For Labuan companies not engaged in trading activities (e.g., holding companies): A flat tax rate of RM 20,000.

In addition, Labuan does not impose GST or VAT on goods and services, which can be advantageous for businesses engaged in international trade. Capital gains are also not subject to taxation in Labuan.

Labuan Money Broking License

The Labuan Money Broking License is a regulatory approval issued by the Labuan Financial Services Authority (LFSA) that allows a financial institution or entity to operate as a money (forex) broker in the Labuan International Business and Financial Centre (LIBFC) as well as internationally, subject to local regulation. Money broking involves facilitating the trading of various financial instruments, including foreign exchange (forex), money market instruments, and other related products. Money broking involves acting as an intermediary between buyers and sellers of financial products. Money brokers facilitate transactions in various financial instruments, including foreign currencies, short-term money market instruments, and derivatives. Entities holding a Labuan Money Broking License can engage in money broking activities with both domestic and international clients. However, the licensee cannot accept clients from Malaysia or otherwise accept deposits in Malaysian Ringgit.

Notable License Requirements

  1. Economic Substance Requirement: Two (2) full time employees and annual operating expenses of at least MYR 100,000 in order to qualify for the minimum three (3%) percent income tax. If the licensee is not compliant, then the income tax rate is assessed at twenty-four (24%) percent.
  2. Capital Requirement: Licensee must maintain unimpaired paid-in-capital of MYR 500,000 or USD 125,000.
  3. Leverage: The maximum leverage a licensee is allowed to offer is 100:1.
  4. Governance: Minimum of two (2) directors to form and such directors and primary stockholders must have at least three (3) years experiences in forex.
  5. Local Compliance Officer: A local compliance officer is not specifically required, but is encouraged.
  6. Local Director: one (1) local director is required.

Notable License Expenses

  1. Corporate Formation: USD 2,500 inclusive of first year registered agent and corporate secretary.
  2. LFSA Application Fee: USD 3,000.
  3. Bank Account Opening: Application fee payable to bank of USD 650.
  4. Physical Presence: Approximately USD 350 per month.
  5. Local Compliance Officer: Expense will vary USD 1,500 – 2,000 per month.
  6. Local Director: Approximately $3,000 per annum.

Time to License

Provided the license application is complete, one can expect to obtain the Money Broking License within 120 days.


Prospective licensees are required to obtain and maintain a Labuan-based bank. For the ideal banking solution, a physical trip to Labuan is encouraged, but not required. Various digital banks have been established in recent years that will allow for remote openings, but are not perhaps the ideal solution for a forex business but are workable.

The Labuan License v. the Rest of the World.

You can find a cost breakdown and comparison of Labuan versus other leading forex licensing jurisdictions here.


The Labuan Money Broking (Forex) License is an often overlooked but can be a very valuable and relatively cost effective license for entering the forex markets – especially in Asia.

My company offers services related to obtaining the Labuan Money Broking License. Be sure to reach out should you have any questions.

Otherwise, you can book a meeting here.

About Adam Tracy

Adam Tracy is a payments expert and entrepreneur who specializes in payment systems, blockchain technology, digital currencies, and other emerging technologies. He is the founder of Blockrunner, LLC that provides consulting services to clients in the blockchain, payments and cryptocurrency arenas.

Tracy has been involved in the payments industry as an attorney, consultant and entrepreneur since 2005, while he was become an expert in blockchain and cryptocurrency since its advent in 2013. Tracy has worked with a wide range of clients, including startups, established businesses, and investor – both in the United States and worldwide. He has advised clients on a wide range of compliance, legal and operational issues related to payment transfer systems, crypto token generation and architecture, cryptocurrency exchanges, regulatory licensing, smart contracts, and other blockchain applications.

In addition to his consulting work, Tracy has founded several companies in the payments, blockchain and cryptocurrency space, including a digital asset hedge fund, licensed electronic money institution and a blockchain-based tokenization platform. He is also a proponent of decentralized finance (DeFi) and has been involved in various DeFi projects.

Tracy is also a frequent speaker and writer on blockchain and cryptocurrency topics. He has been featured in a wide range of publications, including Forbes, Hollywood Reporters, CNBC, Reuters, CoinDesk, and

Find Adam:

Blockrunner, LLC., is a financial services match-making marketplace and consulting company. We are not a bank, FI/NBFI, Payment Service Provider, deposit taking institution, trust, or money services business of any kind. We are not regulated by any financial regulator. Banking, Payment, Processing, and Licensing services are provided by our participating members. This website is for informational purposes only and does not constitute legal advice. If you need legal advice, please consult a licensed attorney in your jurisdiction.