Labuan banking License in Labuan
Level 1
Labuan0
People viewed this LicenseLicense Type
Labuan banking licence
RegulatorLFSA
Share CapitalN/A
Deadlines
10 to 22 months(approx.)
Estimated Market Price
From €150,000
Level 1
LabuanEstimated Market Price
From €150,000
0
People viewed this LicenseLicense Type
Labuan banking licence
RegulatorLFSA
Share CapitalN/A
Deadlines
10 to 22 months (approx.)
Level 2
License Details
Explore full requirements, allowed activities, taxation, and operational scope.
Permitted Activities
Accepting deposits (wholesale/qualified counterparties)
Lending (corporate, project, trade, syndicated)
Trade finance, guarantees, letters of credit
Treasury operations, FX and derivatives (as authorised)
Wealth/private banking services (where permitted)
Correspondent banking and interbank placements
Frequently Asked Questions
Clear, concise info to help you understand the process!
At least three full-time employees in Labuan and annual operating expenditure in Labuan of at least RM200,000, under the Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2021, P.U.(A) 423, gazetted on 22 November 2021 and deemed to have come into operation on 1 January 2019. Meet them and the Labuan business activity is taxed at 3% of audited net profits. Fail them for a year of assessment and the entity is taxed at 24% on net audited profits for that year. The employees must be physically in Labuan and fit and proper.
Only within narrow limits — and the figures most sources quote are wrong. A Labuan bank may transact in any currency including ringgit where Bank Negara permits, but a licensed Labuan entity is a non-resident for Malaysian foreign exchange purposes under BNM's declaration of 28 June 2013, and specifically a non-resident financial institution. Under BNM Foreign Exchange Policy Notice 2, Borrowing, Lending and Guarantee, last revised 2 October 2025, a resident entity or a resident individual, sole proprietor or general partnership may borrow in ringgit for use in Malaysia only up to RM1 million in aggregate from a non-resident — and that allowance expressly excludes borrowing from a non-resident financial institution, so it opens no ringgit channel from a Labuan bank at all. The RM100 million figure still repeated on Labuan FSA's own banking FAQ is a foreign-currency limit: a resident entity may borrow up to the equivalent of RM100 million in foreign currency from a non-resident outside its group, a non-resident financial institution or a non-resident special purpose vehicle. The old RM10 million individual ringgit limit no longer exists. A plan built on serving mainland Malaysian retail or SME customers in ringgit does not fit this licence.
Labuan FSA expects the applicant or controlling shareholder to already be a bank or financial institution, with a sound track record, acceptable credit ratings from recognised agencies, supervision by a competent home regulator and compliance with BIS or equivalent international banking standards. That is the gate most private buyers fail: a family office, a trading group or an unregulated fintech is not the profile the authority licenses. A change of control is assessed against the same criteria as a new application, so a transfer of shares is a company sale, not a regulatory outcome.
The annual licence fee for a Labuan commercial bank is USD 40,000 under the revised fee structure effective 1 January 2026, up from USD 30,000, payable on or before 15 January each year, with USD 35,000 for an investment bank, USD 3,500 for a marketing office and USD 4,500 for a co-located office. On capital, the Directive on Minimum Capital Requirement by Labuan Licensed Entities requires RM10 million unimpaired by losses for a Labuan bank and a Labuan investment bank alike — they sit on the same floor, not different ones — together with a minimum 4% Tier 1 and 8% total capital ratio; for a branch set-up the working-funds requirement is not currently applied and ratios are computed at head-office level. Those fixed costs sit on top of the RM200,000 of Labuan operating expenditure needed for the tax rate and the cost of three local staff. The standing annual cost does not scale down in a quiet year.
No. Under the Malaysia Deposit Insurance Corporation Act 2011, section 36 deems membership only for banks licensed under the Financial Services Act 2013 and Islamic banks licensed under the Islamic Financial Services Act 2013; a Labuan bank is licensed by Labuan FSA under the Labuan Financial Services and Securities Act 2010 and sits outside the scheme. Section 41(1)(a) goes further and excludes from insured deposits anything payable in the course of Labuan banking or Labuan Islamic banking business even where the institution is itself a PIDM member — so a mainland bank's Labuan book is uninsured too. Covered deposits at a member bank are protected to RM250,000 per depositor; a Labuan bank's are protected to nothing. That shapes the depositor base the licence can realistically attract — corporate treasury, trade finance and intra-group funding rather than retail savings. If a seller pitches Labuan as a retail deposit platform, the missing protection scheme is the reason it is not one.
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