Registering an onshore bank is a complex and intricate exercise with the amount of conditions to fulfil which can be extremely time consuming and costly, not forgetting the requirement of a local resident participation. The Labuan jurisdiction offers a friendly environment to qualify candidates for the application of a Labuan Banking license with 100% foreign ownership enabling total control of the business through it’s offshore solutions.

There is a wide spectrum of businesses that one can offer with a Labuan Banking license. The main difference between a Labuan Commercial Bank and a Labuan Investment Bank is that the latter is not allowed to conduct the business of receiving deposits on current account, deposit account, savings account or any other types of account.

The Labuan Financial Services Authority (Labuan FSA) is the institution offering banking licenses. When considering to establish a commercial banking business in Labuan, QX will guide our clients at every stage of the license application. Before anything else, QX will conduct a feasibility study and help steer our clients towards crafting an impressive proposal with the right profile and analytics to satisfy and comply all of the Authority’s requirements. Our team will also assist in all legal, compliance and financial matters, up to the final stages of approval including setting-up of a registered financial institution with the Labuan FSA.

Permissible Activities under A Labuan Commercial Bank

  • Business of receiving deposits on a current account, deposit account, savings account or any other types of account
  • Providing credit facilities
  • Providing consultancy and advisory services relating to corporate and investment matters
  • Dealing in securities
  • Undertaking foreign exchange transactions
  • Interest rate swaps
  • Dealings in derivative instruments or derivative financial instruments or any other similar risk management activities
  • Fund management
  • Other business as the Labuan FSA may allow, with the approval from the Ministry

16 Key Benefits of A Labuan Commercial Banking Business License

  • 3% corporate tax only!
  • 100% foreign ownership without Malaysian local partners!
  • Permissible to deal with local residents in Malaysian Ringgit!
  • Labuan is strategically located in Asia Pacific, ideal to capture the Asian market share!
  • Labuan has the same time zone as major Asian cities, enabling cross border transactions accomplished within the same day!
  • Excellent infrastructure, regulations, and amenities in Labuan IBFC!
  • Labuan is a “white list" jurisdiction, practices transparency and endorses the bilateral exchange of information for tax purposes!
  • Labuan entity is recognised by Hong Kong, Singapore, Dubai, Australia and Malaysia Exchanges for listing!
  • Access to more than 70 Malaysia Treaty Partners!
  • No withholding tax on beneficial owner’s income!
  • Foreign director’s fee is 0% tax!
  • Expatriate employment can enjoy 50% personal tax rebate!
  • Expatriates eligible for a two (2) years work permit together with family members!
  • Eligible to set up Marketing Office in Kuala Lumpur and Iskandar (Johor Bahru)!
  • Eligible to set-up Co-Located Office(s) within Malaysia!
  • A minimal annual license fee of MYR 100,000 only!

Criteria for A Labuan Investment Bank License

The applicant should meet the following minimum eligibility criteria:
  1. Must be a bank or financial institution
  2. Possesses a sound track record
  3. Accorded a good credit rating by acceptable rating agencies
  4. Supervised by a competent regulatory authority; and
  5. Conforms to generally accepted standards of international banking practices or the Bank for International Settlements (BIS), as the case may be.
After the license is approved, in order to operate your Labuan banking business, the entity must be a Labuan company or a foreign Labuan company incorporated or registered under the Labuan Companies Act 1990.

Important Information and Documents for A Labuan Commercial Banking License Application

  1. A Business Plan for the first three (3) consecutive years of operations with financial projections
  2. Certified True Copy of the Company Statutory documents of the applicant company
  3. A comprehensive Corporate Profile, which includes: - The name, place, and date of establishment of the applicant - The principal business and principal place of business of the applicant - The name and address of each member who holds 10% or more of the voting shares of the applicant - The names, addresses, qualifications, and experience of the directors and officers responsible for the overall management of the affairs of the applicant
  4. Three (3) consecutive years of audited accounts of the holding company or participants who each must hold 10% or more of the paid-up capital
  5. Letter of Guarantee from the applicant’s shareholders/head office
  6. Letter of Awareness from competent regulatory authority which supervises the applicant’s shareholder/head office
  7. Memorandum and Articles of Association
  8. Board Resolutions to apply for Labuan Bank license
  9. Audited annual accounts for three (3) preceding years

Approval Conditions and Operational Requirements for A Labuan Commercial Bank

  1. All business transactions must be done in and through Labuan.
  2. The company must have its operations office in Labuan.
  3. The company shall maintain a capital adequacy ratio (CAR) of MYR 10 million at all times.
  4. A licensed Labuan banking business may be allowed to deal in Malaysian Ringgit and with Malaysian residents, subject to the provisions under the Labuan Financial Services and Securities Act 2010 and the Exchange Control Act 1953.
  5. Every director or principal officer (PO) of a Labuan bank must be fit and proper persons.
  6. The appointment of a director or PO of a Labuan bank must obtain prior approval from Labuan FSA.
  7. Comply with the statutory requirements under the Labuan Financial Services and Securities Act 2010.
  8. Comply with the prudential and reporting requirements issued by Labuan FSA.
  9. Adhere to any other requirements issued by Labuan FSA from time to time.
  10. For the Marketing Office(s) or Co-locate Office(s) within Malaysia, certain pre-determined criterias must be observed and followed by the necessary approvals.

Compliance and Reporting Requirements for a Labuan Commercial Banking Business

  1. Submit accounts to Labuan FSA within six months after the close of each financial year
  2. Submit statistics and information required to Labuan FSA from time to time
  3. To pay all annual fees due to Labuan FSA on or before 15 January of each year

STEPS to Apply for A Labuan Commercial Banking License

Process flow for Obtaining A Labuan Commercial Banking Licence | QX Trust - Offshore Labuan

QX TRUST, your one-stop Trust Company in Labuan!

QX TRUST license application service level for Labuan Commercial Banking license include:  
  • Consultation on client's eligibility and application procedures
  • Feasibility study write-up based on client's profile
  • Due Diligence, Profiling and Guidance on documents preparation
  • Construct exclusive Business Plan to meet client's objectives
  • Preparation of Financial Forecast, KYC, Operation and AML/CFT Manuals, Client Agreements etc
  • Submission and supervision of application process until approval
  • Act as liaison and key contact person for both client and Labuan FSA on all correspondences, meetings and /or interviews (if any)