A Guide to Money Broking

A Labuan Money Broking licensee is permitted to engage in the following activities:

1. Facilitating Transactions: Acting as an intermediary to bring together counterparties in mutually acceptable terms for the same financial products in money or foreign exchange markets.

2. Receiving Payment for Services: Charging brokerage or commission fees for services rendered. These fees must be reasonable and appropriate to the nature of the services.

3. Mediation Role: Acting as a mediator but strictly not permitted to act as a principal in the transactions.

Labuan IBFC stands out as one of the best jurisdictions for money broking and forex businesses due to the following reasons:

• Innovative Digital Business Solutions: The Labuan license allows the use of e-wallets and digital wallet tools.

• Multi-Currency Trading: With the license, businesses can design and trade a wide range of currency pairs:

  • Fiat to fiat

  • Fiat to crypto

  • Crypto to fiat

  • Crypto to crypto

• Low Maintenance Costs: Labuan offers low licensing fees and operational maintenance costs, making it one of the most affordable jurisdictions.

• Short Application Timeframe: The process of applying for a Labuan Money Broking License is efficient and streamlined, ensuring a faster turnaround for businesses.

• Strategic Location: Located at the center of Asia, Labuan provides easy access to major financial markets, enabling businesses to tap into the Asia-Pacific region.

• OECD Whitelist Jurisdiction: Labuan operates under strong regulatory frameworks, ensuring compliance with global standards.

• Global Recognition: Labuan is recognized by major stock exchanges across Hong Kong, Singapore, Malaysia, Australia, and Dubai.

Additionally, Labuan offers 100% foreign ownership with a minimum requirement of just one shareholder and two directors. Companies can also benefit from a 3% corporate tax rate, absence of withholding tax, stamp duty, sales tax, capital gains tax, inheritance tax, and tax exemptions on dividends and director fees for foreign directors.

To qualify for a Labuan Money Broking License, applicants must meet the following criteria:

1. Experience: The applicant must have at least three years of expertise in money broking or a proven track record in the field.

2. Regulatory Approval: The applicant should be a regulated money broker or an approved provider of such services from another jurisdiction with the necessary letter of awareness or consent from their home authorities.

3. Licensed Institutions: The applicant may also be a licensed institution, such as an approved money broker under the Financial Services Act 2013, with approval from the Central Bank of Malaysia.

The process for applying for a Labuan Money Broking License involves the following steps:

1. Prepare a Comprehensive Business Plan: Draft a 3-year business plan detailing your operational strategy, business goals, and compliance measures.

2. Submit Application to Labuan FSA: Submit the application with the necessary documentation, including financial statements, organizational structure, and compliance policies.

3. Conditional Approval: The Labuan Financial Services Authority (FSA) reviews the application within 30-60 days.

4. Form Your Labuan Company: Set up your Labuan company after receiving the conditional approval.

5. Fulfill All Requirements: Meet all stipulated requirements under the conditional approval, including appointing auditors and submitting the final set of documents.

6. Receive Your License: Upon approval, you will be issued the Labuan Money Broking License.

To maintain compliance with the Labuan Money Broking License, license holders must adhere to the following requirements:

• Paid-Up Capital: Maintain a minimum paid-up capital of MYR 500,000 or its equivalent in foreign currency.

• Operational Office: Establish an operational office in Labuan with a minimum of two full-time employees and an annual operational expenditure of at least MYR 100,000.

💡See Also👉 Labuan ESR, Labuan Recruitment Services, Labuan Payroll Services & Labuan Office Setup

• Transaction Requirements: Conduct all transactions in foreign currencies except the Malaysian Ringgit, and ensure that transactions are done through and from Labuan.

• Leverage Limit: Impose a maximum leverage limit of 100:1 on client trading transactions (with at least a 1% margin deposit).

• Compliance with AML/CFT: Adhere to Anti-Money Laundering and Counter Financing of Terrorism regulations set forth by the Labuan FSA and the Central Bank of Malaysia.

• Auditing & Reporting: Appoint an approved auditor in Labuan and submit annual reports. Any technical issues discovered in the systems must be reported to the Labuan FSA within 14 days.