Labuan Money Broking License Acquisition Support

Bona Trust Corporation provide Money Broking License Acquisition Support service (Crypto Currency Exchange also possible as a secondary market).

Labuan_Money_broker


1. What is Money Broking Service ?

Money Broking Business is defined as a broker acting as an intermediary by obtaining brokerage fees mainly for transactions between buyers and sellers in the foreign exchange market.

Kindly note that this does not include proprietary trading by money brokers themselves as market participants.

Please confirm which of the following is applicable to your business:-

Types of financial nature of business
 IncorporationTransaction attributesNature of BusinessLicense
(1)Labuan IncorporationProprietary tradingInvest own fundsNo broker license required

→ Investment company

(2)Labuan IncorporationCustomer account tradingProvide brokerage servicesBroker license required

→ Brokerage company

(3)Labuan IncorporationProprietary trading

* When collecting funds from 50 or less specified investors
Share profits to investorsNo fund license required

→ Private fund

(4)Labuan IncorporationProprietary trading

* When collecting funds from over 50 unspecified investors

Share profits to investorsFund license required

→ Public fund

For the money broking business, only those who fall under (2) above are required.

Note: When acquiring the license and operating the crypto currency exchange, there is a secondary market review in addition to the regular review. Kindly note that a 2-stage review is required.

A. Minimum eligibility criteria for applicants
1. Malaysian company licensed domestic (onshore) financial broker

2. Labuan company established under the Labuan Companies Law (Act. 1990)

3. Organisations approved by the Bank of Malaysia (Act. 1989) and Financial Institutions Act with prior approval of the Central Bank of Malaysia

All applicants in the above categories are required to have a good financial position within at least the last 3 years and have the financial ability to reliably operate the money broking business in Labuan.

B. Regulatory requirements
• Maintain minimum paid-up capital unimpaired by losses of RM500,000 or its equivalent in any foreign currency.

Labuan FSA may exercise its discretion to require additional capital to commensurate with the business operations in Labuan.

C. Operational requirements
• The company must maintain a registered office on Labuan Island and all transactions must be conducted through the registered office in Labuan

• All transactions must be paid in a foreign currency other than Malaysian Ringgit, except for administrative and statutory fees

• and includes person who is declared to be a resident pursuant to s.43 of the Malaysian Exchange Control Act 1953.

• Appointment of a Labuan approved auditor.

• The company must inform the Labuan FSA of any revisions or changes to the information contained in the constituent documents.

D. Economic Substance requirements
(a) The company must employ at least 2 full-time staff in Labuan as a minimum employment requirement.

and

(b) The company must spend at least RM100,000 on Labuan as the minimum annual expenditure (RM)

* If the above requirements are not met, the mainland Malaysia corporate tax (24%) will be applied as the effective tax rate (from January 2019)

(Ref: Labuan IBFC [Labuan Business Activity Tax])

E. Application Requirements
The submission should include, but is not restricted to, the following:

A business plan detailing the applicant’s work and strategy

Description of the applicant’s business

Certified true copy of the license certificate authorised by the relevant authorities in your country (only for those who require embassy certification)

Notifications recognised or approved by the relevant authorities in your country, information about the potential customer’s jurisdiction (if applicable)

Letter of support / approval by the court of jurisdiction that imposes restrictions and restrictions on foreign exchange transactions (applicable only)

Acceptance of liability for damages arising from the work of the Labuan branch or subsidiary from the head office or parent company

• 3-year financial forecast (balance sheet, Profit Loss sheet)

• Labuan FSA’s prior written approval (the applicant’s controller or director or chief executive must be a proper person)

• Audit records of the financial statements of the applicant’s annual report for the past 3 years (applicable only)

• Framework for compliance with the Money Laundering and Counter-Terrorism Funding Act of 2001 (KYC = Know Your Customers) and other information related to the application

F. Fees
Type of FeesAmount
Annual FeeRM5,000USD1,500
Marketing Office FeeRM7,500USD2,500

* Annual license is a renewal fee for financial broker license, and it costs 745 USD / year as a separate renewal fee for Labuan Company. In addition, the annual license will be summed up with the company’s secretary fee of us, and will be billed by us.


2. Characteristics of Labuan Money Broker

Characteristics of Labuan financial broker is as follows:-

Labuan_FX

Characteristics of Labuan Money Broker License Company

Share CapitalPermitted CurrenciesAny Foreign Currency except Ringgit Malaysia
Standard CurrencyUSD
Minimum Issued CapitalAmount equivalent to MYR 500,000 in foreign currency
Authorised CapitalN/A
Nominal valueN/A
DirectorsMinimumTwo (2)
Corporate DirectorsNot allowed
Local Directors RequirementsOptional
Location of MeetingAnywhere
Minimum number of participantsAccording to the provisions of the articles of incorporation
Publicly Accessible RecordsNot in public
ShareholdersMinimumOne (1)
Bearer SharesNo
Corporate ShareholdersAllowed
Local Shareholders RequirementsOptional
Location of MeetingAnywhere
Minimum Numbers of MeetingOne (1) Annually
Publicly Accessible RecordsNot in public
Company SecretaryMinimumOne (1)
RequirementsA resident secretary who must be a trust officer of a trust company or Labuan / Malaysian domestic company wholly-owned by the Labuan trust company
Registered OfficeRequirementsPrincipal office of a trust company in Labuan
AccountsRecordsMust keep in Labuan
Preparation of AccountsYes
Audit Requirements and filingOn the audited net profits
Publicly Accessible RecordsNot in Public
Annual RequimentsAnnual ReturnNot later than 30 days from the anniversary date of incorporation of the Labuan company
Annual Government FeeOn or before the anniversary date of incorporation of the Labuan company
Tax FilingAnnual tax return needs to be filled with Malaysian Director General of Inland Revenue by 31 March of that year of assessment. Normally, an extension of time for filling is allowed by the Inland Revenue.
TaxationBrokerage revenue3% of net audit profits
OthersNo withholding tax, no capital gain tax, no stamp duty on offshore instruments

3. How to proceed with the license acquisition procedure

There are 2 main steps to obtaining a license, kindly let us know which method you will use.

Flow until license acquisition
(1) When Labuan incorporation  and license application separatelyFlow until license acquisitionLabuan Incorporation (5 days to 1 week from the date of establishment application)Open bank account (2 weeks to 1 month after completion of registration)After rewriting the Articles of Incorporation, apply for a license (about 2 months from the date of application)
MeritCompletion of company registration only, bank account can be obtained quickly, and work permit can be applied (broker operation is impossible until license is obtained)
DemeritProcedure is troublesome
(2) When Labuan incorporation  and license application at the same timeFlow until license acquisitionLicense acquisition application + Labuan corporation (about 2 and half month  from the acquisition application date)Open bank account (2 weeks to 1 month after completion of registration)
MeritProcedure is easy
DemeritCompany registration is completed with the license granted from the beginning, but until then bank account or work permit application is impossible

The Labuan Special Economic Zone in Malaysia has revised some of the domestic laws to meet the requirements of the OECD – BEPS Action Plan and has started operations in accordance with international standards.

As a result, it will be possible to realise a highly transparent Money Broking business by satisfying real activity requirements.

Labuan has no time difference with the Asian region (only 1 hour time difference with Japan・Korea), is in an environment where operations are extremely easy to implement, and construction of a structure that meets the activity requirements at low labor costs is realised at low cost you can do it.

It can be said that it is worth examining Labuan for the realisation of Money Broking business.

(Ref:Labuan IBFC [Labuan Financial Services and Securities Act 2010])

(Ref:Labuan IBFC [Labuan Companies Act 1990])

(Ref:Labuan IBFC [Labuan Business Activity Tax Act 1990])

(Ref:Labuan IBFC [Guidelines on Carrying Out Money Broking Business in Labuan IBFC])


4. About Labuan Company Incorporation

Kindly refer to “Labuan Company Incorporation” on how to incorporate Labuan company.


5. About Labuan Company Annual Renewal

Kindly refer to “Labuan Company Annual Renewal” about how to renew Labuan company.

Should you have any queries, please do not hesitate to contact us.


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