DIGITAL BANK LICENSE Labuan Financial Business > Financial Service Digital banking is now the norm in Asia. The rise of technology-driven innovation in the financial services sector has spurred the establishment of digital banks in Labuan, aiming to enhance service delivery efficiency and reach a wider market. Labuan Financial Services Authority (LFSA) offers digital banking licenses, available in both conventional and Islamic forms, to facilitate this transition. Several countries have already granted such licenses to eligible entities. The Labuan Digital Banking Framework, developed by Labuan Financial Services Authority (Labuan FSA), seeks to promote technological innovations in the financial sector, particularly within Labuan International Business and Financial Centre (Labuan IBFC). What is a Labuan Digital Bank? A digital bank offers the same range of banking services as a traditional bank but operates primarily or entirely online, with minimal physical infrastructure. Unlike traditional banks, which often have a network of physical branches, a digital bank typically maintains only one physical location, situated in Labuan, aligning with its digital business model. A Labuan Digital Bank can engage in a range of business activities including: • Digital corporate banking. • Customer onboarding. • Digital trade. • Digital loans origination. • Watch banking/wearable tech. • Financial chatbot. • Mobile wallet. • Social banking. Copyright © 2025 BBS TRUST INT’L LIMITED 备博思信托国际有限公司. All rights reserved. Build Business Sustainability Internal Controls Management: Fact Sheet Digital banks are required to ensure robust policies and controls in technology-related areas. Focus on technology-related areas: • Information security. • System resilience. • Business continuity management. ADVANTAGES & KEY BENEFITS 1. ZERO withholding tax on payments of dividend and interest to non-residents. 2. No stamp duty on all instruments relating to offshore business activities including share transfer. 3. No import duty/ sales tax. 4. No foreign exchange controls. 5. No capital gain tax, inheritance tax. 6. Double Tax Agreements between Malaysia and over 70 countries. 7. 100% exemption for director’s fees received by non-citizen directors of Labuan companies. Who meets the criteria to apply for a license to operate a Labuan Digital Bank? 1. Demonstrates robust financial resources and the capability to maintain the minimum required paid-up capital. 2. Presents a credible and sustainable business plan outlining the strategic utilization of technology to achieve proposed business objectives. 3. Exhibits proficiency in conducting digital financial services, ecommerce, and technology-driven operations. 备 博 思 信 托 国 际 有 限 公 司
HOW TO APPLY? BBS TRUST INT’L LIMITED can assist you for the application of Digital Bank License to Labuan FSA. Contact us now for a non-obligational consultation! Email: [email protected] or Call: +603-4815 6718 Copyright © 2025 BBS TRUST INT’L LIMITED 备博思信托国际有限公司. All rights reserved. DIGITAL BANKING LICENSE Steps to Apply Labuan Digital Banking License 1. Propose a name for the Digital bank. 2. Submit the Digital banking license application to Labuan Financial Services Authority (Labuan FSA). 3. Undergo the Conditioning Approval Processing phase, typically spanning 30-60 days. 4. Establish your Labuan company. 5. Satisfy all stipulated requirements as per the Conditional Approval. 6. Upon successful fulfillment of all conditions, the digital banking license will be issued. Fact Sheet What are the Operational Requirements of a Labuan Digital Bank License? ✓ Minimum Paid-up Capital: Always maintain a minimum paid-up capital of MYR 50 million or its equivalent in any foreign currency. Labuan FSA may, at its discretion, mandate additional capital based on the digital bank's business operations, considering factors such as risk profiles, nature, scale, complexity, and diversity of business activities. ✓ Non-interest Security Deposit: Place a refundable non-interest security deposit of MYR 5 million or its equivalent in any foreign currency, which will be refunded after three years from the placement date. ✓ Operational Office in Labuan: Establish an operational office in Labuan to comply with the Labuan Financial Services and Securities Act (LFSSA) or Labuan Islamic Financial Services and Securities Act (LIFSSA). ✓ Technology-related Policies and Controls: Implement robust policies and controls in technology-related areas, particularly focusing on information security, system resilience, and business continuity management. This includes aspects such as IT governance, cybersecurity, online client onboarding processes, and systems adequacy. ✓ Cyber Risk Management: Establish a cyber risk management policy and procedures for regular review of security and technology-related arrangements, as well as a robust Know Your Customer (KYC) include e-KYC framework. ✓ Name Disclosure: Clearly indicate the Labuan Digital Bank's name in all communication media. ✓ Appointment of Key Personnel: Appoint a director, person in control, or principal officer (PO) who must be fit and proper. The appointment requires prior approval from Labuan FSA, with the PO appointment valid for two years and renewable upon submission of a renewal application one month before expiry. ✓ Record-keeping: Maintain adequate and proper records and books of accounts in Labuan, ensuring that all operations are conducted from the operational office in Labuan. ✓ Auditing: Appoint internal and external auditors to audit operations and accounts under LFSSA and LIFSSA. ✓ Compliance and Adherence: Comply with applicable laws, rules, and regulations relevant to Labuan digital banking business, as well as any additional requirements issued by Labuan FSA periodically. BBS TRUST offers comprehensive application solutions for obtaining your Labuan Digital Bank License, which include: - ✓ Eligibility Consultation, ✓ Document Preparation, ✓ Application submission, ✓ Liaison with Labuan FSA, ✓ Advisory Services, and ✓ Operational Support.