What is a Labuan Insurance licence
A Labuan insurance broker is granted a Labuan money broker license to be authorised to arrange Labuan insurance business for existing policy owners or prospective.
A Labuan insurance broker will also arrange Labuan reinsurance business for any interested insurer seeking reinsurance.
Furthermore, a Labuan insurance broker license allows a Labuan insurance broker to execute financial planning activities, but they are prohibited from directly interacting with residents with the exception of reinsurance, high-net-worth clients, and other individuals deemed eligible by the Labuan Financial Services Authority.
They are further prohibited to broke for direct Malaysian risks.
Labuan Insurance Broker Operational and Licensing Requirements
- The broker needs to be a member of the Labuan International Insurance Association.
- The broker needs to keep maintaining the minimum paid-up capital amount or, alternatively, a working fund of 300 000 Malaysian ringgit or the equivalent of that amount in any other foreign currency.
- The broker is required to offer a letter of undertaking or guarantee given by the primary company to Labuan FSA.
- Operations need to set up an operational office within Labuan, which is managed by a team with sufficient knowledge as well as expertise regarding the insurance business. Alternatively, operations are required to designate a licensed Labuan Insurance Manager.
- A Labuan insurance broker is required to appoint an auditor.
- The designation of any individual who will be in control, whether a principal officer or a director, is required to obtain prior approval from the Labuan Financial Services Authority. If Labuan insurance brokers exist as a branch, they do not need to obtain approval on the designation of persons in control.
- A Labuan Insurance Broker must possess professional indemnity insurance coverage that includes a minimum of 2.5 million Malaysian ringgit or the equivalent of that amount in another foreign currency.
- Any people in control, such as a PO or a director, must be fit for the role, and adverse reports from reliable sources with not be applied to them.
Labuan Insurance Broker Approved Activities
Approved Money Broking Activities
- Allowed to broke life insurance policies for wealthy Malaysian citizens with life insurance companies licensed under the Labuan Financial Services and Securities Act (LFSSA)
- Allowed to broke direct insurance business with any existing insurance company irrespective of whether they are officially licensed under the LFSSA, except for direct Malaysian risks.
- Allowed to broke direct Malaysian risks transacted in the native currency of Malaysia.
Restricted Money Broking Activities
- The Labuan insurance broking company is not allowed to deal directly with residents or direct Malaysian risks unless otherwise defined by the Labuan FSA to be high net-worth persons. A resident is defined as such by the Malaysian Exchange Control Act.
- High net-worth persons in the context mentioned above refer to an individual who spends a minimum of 20 000 in Malaysian ringgit or the equivalent of that amount in a foreign currency on one premium policy or a minimum of 15 000 Malaysian ringgit or its equivalent on an annual premium policy.
A Labuan insurance broker with a Labuan money broking license may operate the reinsurance or insurance of a domestic insurance business that is transacted in Malaysian ringgit if the transactions activity isn’t prohibited or regulated by another Malaysian law.
Labuan Licensed Forex Brokers: FAQs
How do taxes work in Labuan?
A broker with a Labuan forex license will pay a fixed amount of RM20 000 or a 3% taxes rate.
Which regulatory Labuan entity supervises Malaysian licensed Forex brokers?
The LFSA or the Labuan FSA regulates all Labuan licensed forex brokers.
Are any deposit bonus restrictions involved for licensed forex brokers?
The LFSA does not as of yet apply any deposit bonus restrictions for Labuan licensed forex brokers conducting forex business in Labuan.
Before commencing business with any financial services company, investors should ensure they are properly licensed and regulated.