Labuan Forex License: Full 2025 Guide (Money Broker License Explained)

How to obtain a Labuan FSA Money Broker License for forex brokerage, liquidity provision, and FX dealing services.

Labuan, Malaysia has become one of the most attractive offshore financial jurisdictions for forex brokers, fintech platforms, liquidity providers, and digital trading businesses seeking a fully regulated framework with low tax, fast licensing, and cost-effective compliance requirements.

This guide provides the complete, step-by-step overview of the Labuan Forex (Money Broker) License under the Labuan Financial Services Authority (LFSA), including the application process, minimum capital, substance rules, ongoing obligations, and how Labuan compares to other popular licensing jurisdictions such as Mauritius and Vanuatu.

Whether you are launching a new forex brokerage or migrating an existing offshore entity to a regulated jurisdiction, this page includes everything you need to know.

1. Overview: What Is a Labuan Forex (Money Broker) License?

A Labuan Money Broker License is the official regulatory authorization issued by the Labuan Financial Services Authority (Labuan FSA) that allows a company to:

• Conduct foreign exchange brokerage

• Facilitate currency trading between counterparties

• Arrange trading in international money market instruments

• Act as an intermediary between clients and liquidity providers

• Operate white-label brokerage platforms

• Provide client onboarding and execution routing services

• Offer margin FX (with approved counterparties)

• Provide STP, ECN or agency brokerage business models

A key point:
The Labuan Money Broker License does NOT allow market-making (dealing on own account).
Labuan’s regulatory framework is agency-only, meaning no proprietary trading or B-Book operations.

If your business requires market-making, Zitadelle AG provides guidance for alternative jurisdictions that allow such activity.

2. Key Benefits of the Labuan Forex License

Labuan remains one of the most efficient licensing centers globally due to:

✔ Fast approval timeline (typically 45-90 days from submission date)

Much faster than Mauritius or European jurisdictions.

✔ Low corporate tax - only 3% on net audited profits

Or a flat MYR 20,000 if more advantageous.

✔ Straightforward regulatory requirements

Clear minimum capital, simple onboarding with FSA, and predictable supervision.

✔ Full legitimacy for forex brokers

Internationally recognized and respected in Asia and the Middle East.

✔ 100% foreign ownership allowed

No local shareholders required.

✔ Low operational cost

Staff, office, and compliance costs are significantly lower than Mauritius or EU.

✔ Access to Malaysian banking and corporate ecosystem

Labuan companies benefit from Malaysia’s financial infrastructure.

3. Activities Allowed Under a Labuan Money Broker License

Under the Labuan Financial Services and Securities Act (LFSSA), an approved brokerage is permitted to provide:

Allowed Activities

• Online retail forex brokerage (agency model)

• STP and ECN execution

• Intermediation between clients and liquidity providers

• Introducing broker (IB) activities

• Marketing of FX and CFD services

• Provision of trading platforms such as MT5, MT4, cTrader

• White-label issuance for institutional or retail clients

• Cross-border FX dealing (non-Malaysian clients)

• Provision of FX tools or education (within limits)

Not Allowed

• Market-making or B-Book

• Malaysian resident clients

• Acting as a liquidity provider

4. Step-by-Step Licensing Process (Complete Guide)

Below is the full, detailed licensing process exactly as expected by Labuan FSA.

Step 1 - Pre-Licensing Consultation and Business Model Review

Zitadelle AG provides:

• Strategic consultation

• Full business plan writing

• Regulatory model structuring

• Review of shareholders and directors

• Preparation of AML and compliance documentation

• Responses to Labuan FSA questions and clarifications

Zitadelle AG has a physical office in Labuan with local employees who assist directly with local queries and operational setup.

Step 2 - Company Incorporation (Labuan Company Registration)

To apply for a forex license, a Labuan company must be incorporated:

• 1 shareholder

• 2 directors (at least one must be fit and proper)

• RM 500,000 paid-up capital requirement (and higher with new requirements)

• Local company secretary

Step 3 - Preparation of License Application Package

The application includes:

Corporate Documents

• Company incorporation documents

• Board resolutions

• Identification and proof of address

• Shareholding structure

Regulatory Business Plan

Prepared by Zitadelle AG, covering:

• Services to be offered

• Execution model (STP, ECN)

• Technology providers

• Target markets

• Risk management

• AML and compliance frameworks

• 3-5 year financial forecast

• Organizational structure

Step 4 - Fit and Proper Assessment

Labuan FSA reviews:

• Criminal record

• Financial integrity

• Background and experience

• Professional qualifications

• Regulatory history

Directors and shareholders with financial or forex experience are preferred.

Step 5 - Submission to Labuan FSA

Zitadelle AG manages the full submission process and answers all regulator questions on your behalf.

FSA will:

• Conduct a due diligence review

• Request clarifications if needed

• Review business model, compliance, and AML framework

Step 6 - Approval in Principle (AIP)

Once the regulator is satisfied:

✔ The application is approved
✔ Operational and substance requirements must be finalized

This is typically issued within 45-60 days.

Step 7 - Meeting Substance and Operational Requirements

You must complete:

Operational Setup

• Office rental (physical or virtual) - Zitadelle AG provides both

• Employment or outsourcing of local personnel

• Appointment of Compliance Officer (we can provide)

• Finalization of agreements with liquidity providers

• Implementation of AML/CFT monitoring tools

• Establishing corporate governance structure

Step 8 - Final License Issuance

After meeting all conditions and injecting the capital:

🎉 The Labuan Money Broker License is formally issued.

You may now legally operate a forex brokerage.

5. Requirements for the Labuan Forex License

A. Corporate Requirements

• Labuan company with proper business objects

• Minimum 1 shareholder

• Minimum 2 directors

• One director must be experienced in financial or forex services

• Local company secretary

B. Capital Requirements

• Minimum paid-up capital: RM 1,000,000 (≈ USD 220,000)

C. Personnel Requirements (2 local staff members required)

• Compliance Officer in Labuan - suggested to be a local

  Principal Officer - can be a foreign national

• Optional outsourced staff: AML analysts, risk managers, internal audit

  
  

  Zitadelle AG can assist with full staff recruitment

D. AML/CFT Requirements

License holders must maintain:

• AML/CFT policy

• Risk-Based Approach

• Detailed KYC/KYB procedures

• Ongoing monitoring

• KYT rules

• Sanctions screening

• Travel Rule compliance for digital assets when applicable

E. Substance Requirements

Labuan mandates:

• A physical or approved virtual office in Labuan

• At least one operational or compliance officer based in Labuan or Malaysia

• Local business presence and telephone number

• Accounting and record keeping in Labuan

• Annual board meetings held in Labuan

Zitadelle AG offers local staff placement, furnished offices, and virtual office solutions.

6. Timeline for Labuan Forex License Approval

7. Labuan FSA Expectations (What Regulators Look For)

To ensure fast approval, FSA expects:

• Clear and well-documented business model

• Directors with financial experience

• Strong AML/CFT documentation

• Transparent ownership structure

• Adequate substance presence

• No connection to high-risk jurisdictions

• No previous regulatory issues

• Clear client flow and LP arrangements

Zitadelle AG’s team ensures full compliance with all expectations.

8. Licensing Costs and Capital Requirements

1. Capital Requirement

• RM 500,000 paid-up capital

2. FSA Fees

• Application fee: RM 7,500

• Annual license fee: RM 20,000

3. Operational Costs

• Office rental: RM 6,000 to RM 50,000+ annually

• Compliance officer cost

• Accounting and audit

• Technology and trading platform

Zitadelle AG provides a full cost breakdown during consultation.

9. Substance Requirements in Detail

Labuan Money Broker license holders must maintain:

• A Labuan office (virtual or physical)

• Local compliance presence

• Management availability for regulator communication

• Accounting and audit performed in Labuan

Zitadelle AG has a local Labuan office with full-time employees, making compliance and substance maintenance straightforward.

We support:

• Office rental

• Employee hiring

• Local director arrangements

• Compliance staffing

10. Labuan vs Mauritius vs Vanuatu

Labuan is ideal for STP brokers who want quick approval and strong Asian credibility.

11. FAQ: Labuan Forex License

Can a Labuan forex license service global clients?

Yes, except Malaysian residents and sanctioned jurisdictions.

Does the license allow market-making?

No, only agency brokerage.

Can CFDs be offered?

Yes, depending on structuring and LP setup, yet only on currency pairs.

Can we use MT4/MT5 or cTrader?

Yes, all major platforms are accepted.

How long does approval take?

3-7 months.

Is a physical office mandatory?

A physical or virtual office is required. Zitadelle AG provides both.

12. Why Choose Zitadelle AG - Proven Track Record in Labuan

Zitadelle AG is one of the leading regulatory advisory companies specializing in forex, digital assets, and investment licensing. Unlike many international consultancies, Zitadelle AG has an actual physical office in Labuan with local employees, enabling:

• Direct coordination with Labuan FSA

• Business plan preparation

• Local operational setup

• Office rental and utility arrangements

• Local staff hiring and recruitment

• Company secretary coordination

• Assistance with audits, inspections, and compliance

• Fast resolution of regulator queries

Proven Licensing Track Record in Labuan

Zitadelle AG helped the following companies obtain Labuan FSA licenses:

✔ B2Broker - Investment Banking License
✔ Tradeview - Money Broker License
✔ ICM Capital - Money Broker License
✔ Amana Capital - Money Broker License
✔ Plotio - Money Broker License
✔ FXDD - Money Broker License
✔ Several others in forex, digital assets, and investment services

This makes Zitadelle AG one of the most experienced firms in the region.

Get Started With Your Labuan Forex License

If you want a fast, compliant, and fully managed setup in Labuan, our team is ready to assist with the entire end-to-end process.

Contact Zitadelle AG to receive a full cost breakdown and personalized assessment.