LABUAN INVESTMENT BANKING LICENSE

Labuan Investment Banks primarily serve corporations and government bodies and high net worth individuals as part of their Wealth Management business. Labuan Investment Banks are permitted to conduct all business activities of commercial banks, excluding the smaller retail and remittance activities from individual/corporate accounts.

Labuan’s strong regulatory banking framework, flexible and favorable tax regime including its low operational and set-up cost have attracted many international players to domicile their investment banking business in Labuan. Todate Labuan has close to 60 reputable banks, they include HSBC, DBS, Sumitomo, BNP Paribas, Goldman Sachs etc.

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Permitted Business Activities for A Labuan Investment Bank


1. The business of providing credit facilities (Transaction Banking)

  • Principal investing
  • Trade financing - - letter of credit, performance, and financial bank guarantees
  • Project / asset financing - - project evaluation/ feasibility studies
  • Syndication / loan arrangement
  • Revolving credit

2. The business of providing consultancy and advisory services relating to corporate matters (Corporate Finance)

  • Mergers and acquisitions
  • Initial Public Offerings (IPO)
  • Capital restructuring
  • Dealing in securities - - e.g. debt issuance

3. The business of undertaking foreign exchange transactions, interest rate swaps, dealings in derivative instruments or derivative financial instruments or any other similar risk management activities (Securities Trading)

  • Derivatives - - interest rate swaps, cross-currency swaps
  • Hedging - - interest rates, LIBOR, etc
  • FOREX (Foreign Exchange)
  • Treasury / government bonds
  • Unit trusts
  • Funds
  • Listings of financial instruments on Labuan International Financial Exchange (LFX)
  • Proprietary trading
  • Issuance of financial products for sale

4. The business of providing consultancy and advisory services relating to investment matters (Asset & Wealth Management)

  • Private banking
  • Wealth management for High Net Worth Individuals (HNWIs)
  • Portfolio fund management of sovereign wealth funds, pensions and corporations

5. Labuan Islamic investment banking business, if Shariah compliant.

Labuan Investment Banking License – The Requirements


The application may be accepted from any one of the following:
  1. An investment bank or group engaging in investment banking activities licensed by the regulatory authority in the country of origin; or
  2. A licensed bank or an established financial institution or financial service provider supervised by a competent regulatory authority; or
  3. Any institutions licensed under the Financial Services Act 2013 with prior approval from Bank Negara Malaysia (ie Central Bank of Malaysia); or
  4. Corporations with the necessary expertise and experience in the financial industry with at least three (3) years of good track record and regulated by an authority in their home country.

Regulatory and Operational Requirements for Labuan Investment Bank


  • Not allowed to accept deposits for individuals and corporates
  • Allowed to deal in Malaysian Ringgit and foreign currencies
  • Minimum working fund/capital of MYR 10 million or equivalent in any other currencies, which is to be maintained throughout the business operation
  • Must maintain a physical presence in Labuan with an option to establish an office or offices in other parts of Malaysia other than its office in Labuan (referred to as the “Co-located Office”)
  • Every director or principal officer (PO) of a Labuan investment bank must be a fit and proper person and shall not be subjected to any adverse reports from any reliable sources. Appointment of a director or PO of a Labuan investment bank must obtain prior approval from Labuan FSA
  • FATCA Compliance – Reporting on US citizens/residents is required for dealings exceeding USD 50,000
  • Comply with the statutory requirements under the Labuan Financial Services and Securities Act 2010
  • Adhere to any other requirements issued by Labuan FSA from time to time

Main Governing Legislation / Acts for A Labuan Investment Bank


  • Exchange Control Act 1953
  • Guidelines on Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT)
  • Labuan Financial Services and Securities Act 2010
  • Financial Services Act 2013
Note: Information is accurate at time of publication and subject to changes from time to time based on the LFSA guidelines.

Criteria for A Labuan Investment Bank License


The application may be accepted from either one of the following:
  1. An investment bank or group engaging in investment banking activities licensed by the regulatory authority in the country of origin; or
  2. A licensed bank or an established financial institution or financial service provider supervised by a competent regulatory authority; or
  3. Any institutions licensed under the Financial Services Act 2013 with prior approval from Bank Negara Malaysia (ie Central Bank of Malaysia);  or
  4. Corporations with the necessary expertise and experience in the financial industry with at least three (3) years of good track record and regulated by an authority in their home country.

Application Timeframe


  1. Approximately 30 to 60 days, subject to further information and supporting documents required by Labuan FSA during the approval process
  2. Interviews / Meetings with the key personnel may be requested by the Labuan FSA to understand or clarify certain processes

Annual Fee


Annual License Fee MYR 100,000
Marketing Office Fee
(optional)
MYR 7,500
Co-Located Office Fee
(optional)
MYR 10,000

The Annual License, Marketing Office and Co-Located Office fees are payable upon approval valid up to 31st December. For subsequent years, fees are to be paid on or before 15th January of each calendar year

STEPS to Apply for A Labuan Banking License


HOW CAN I GET STARTED - Investment Banking License

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


  • 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 business 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)

Why QX TRUST for your Labuan Investment Banking business set-up?


Operating a banking business can be overwhelming, complicated and requires certain levels of expertise to meet the criteria especially when one is new to the banking business in a new jurisdiction. We provide holistic management outsourced solutions to support and promote our client’s business activities at every stage of a Labuan banking business. All will be taken care of including ensuring the business is carried out in accordance with all Acts which includes the review of all accounting and record systems along with the approved and audited financial statements.

Our dedicated team is highly experienced in providing complete solutions in feasibility study, planning, structuring, establishment and corporate services for your Labuan banking business needs.