The Labuan Payment System Operator (PSO) Licence in 2024

Since 2003, Healy Consultants Group has been assisting our Clients with the A to Z of payment system operator business setup and licensing. Our services include: i) company registration ii) company secretary and registered address services iii) international corporate bank account opening services iv) sourcing local employees and physical office space solutions v) preparation of AML/CFT programmes and other required documents vi) securing a Payment System Operator (PSO) license with Labuan FSA.

• What is a Labuan PSO Licence?

  

  • The PSO licence is granted by the Labuan FSA. Licensing applications are processed by the FSA within three months;
  • After the licence application is approved, your Labuan entity will be able to legally offer brokerage services including i) transferring funds from one bank account to another ii) providing payment instrument network operation, and iii) providing clearing and settlement services for payment instrument issuers and merchant acquirers;
  • Only local entities and branches can apply for a licence. Non-resident entities cannot apply. Consequently, most of our Clients also engage us to register a simple, practical Labuan LLC. Find out more detail on Labuan company incorporation steps on this page.

• Advantages of a Labuan PSO company

  • Labuan is an established financial hub for companies looking to enter and expand into Asia, including Islamic finance and FinTech
  • A Labuan PSO company is tax efficient. For example: i) 3% tax on annual net profits ii) no sales tax, VAT, custom duties or stamp duties iii) no withholding taxes on dividends, royalties and interest payments and iv) access to Malaysia’s double tax treaty network.

  A detailed list of the advantages of registering a company in Labuan is available on this page.

• Disadvantages of a Labuan PSO company

  • Annual financial licence fees are up to US$30,000.
  • Labuan, and Malaysia in general, suffers from a dearth of qualified financial talent. Singapore and Hong Kong attract top regional talent.
  • Malaysian assets held by Labuan companies may not be attractive to foreign buyers. Assets valued in Malaysian Ringgit are likely to lose value, because the Ringgit is volatile.
  • To curb tax evasion and other harmful tax practices, Labuan companies are subject to economic substance requirements.

  A detailed list of the disadvantages of registering a company in Labuan is available on this page.

• Regulatory licence considerations

  • Preparation of documents: Healy Consultants Group will assist our Client in preparing i) licence application forms ii) a detailed business plan iii) letter of guarantee and iv) letter of undertaking;
  • AML/CFT programme: Healy Consultants Group will prepare a detailed Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) programme including i) reviewing Labuan AML/CFT regulations ii) liaising with our Client to understand their business model and specific KYC risks iii) supply a MS Word AML/CFT programme including a) AML/CFT policy and procedures b) Risk Disclosure policy c) general terms and conditions and d) privacy policy for our Client’s review and iv) amending the document as per our Client’s request;
  • Securing pre-conditional approval: Once ready, Healy Consultants Group will submit a high-quality licence application to Labuan FSA. Two types of processing are available: Normal and Fast Track. The processing fee differs for each case. Healy Consultants Group recommend our Client to proceed with Fast Track. All going well, pre-conditional approval will be received within 1 month;
  • Recruiting local employees: Healy Consultants Group will i) source multiple quality candidates for the above mentioned positions and ii) subject the candidates to our recruitment process iii) aggressively and skilfully negotiate their consulting terms and conditions iv) minimise annual fee requests by asking them to share roles and v) supply you a detailed comparison table; comparing and contrasting each candidate for your final interview;
  • Sourcing physical office solutions: Healy Consultants Group will assist our Client to find physical office premises. Our team will provide a detailed comparison table including i) location ii) price per square feet iii) number of years of tenancy iv) fully or partially furnished and v) photos. Thereafter, Healy Consultants Group will draft a lease agreement. Our Client is required to pay annual rent directly to the landlord;
  • Capital injection: After conditional approval for the PSO is approved, our Client must inject a paid-up capital of at least US$125,000 (RM500,000) to the corporate bank account;
  • Submission of licence application: After the above steps are completed, Healy Consultants Group will collate and submit a quality licence application file to Labuan FSA. All going well, the license will be approved within three months. During the review, our Clients should, however, expect the regulator to revert multiple times for additional information and supporting documents.
  • Successfully securing approval from Labuan FSA: Within one month of submitting the final quality application to Labuan FSA, Healy Consultants Group will secure licence approval from Labuan FSA for our Client’s PSP business.
  • Recruiting local employees: Healy Consultants Group will ensure that candidates sourced for our Client’s Labuan Payment Services company meet the FSA’s Fit and Proper Person Guidelines.

• Accounting & tax considerations

  • Corporate tax in Labuan is levied on a PSO company at 3% of audited net profit for income sourced outside Malaysia.
  • Non-resident Labuan PSO companies are exempt from indirect taxes such as VAT, sales tax, custom duties and GST. All resident Labuan PSO companies making sales within Malaysia are levied indirect taxes in the form of GST at a rate of 6%.
  • Tax returns must be filed by 31^st March, or a 10% penalty will be imposed on the outstanding balance.
  • There are no exchange controls imposed on Labuan offshore companies. Moreover, there are no restrictions on Labuan companies transacting with Malaysian residents in Malaysian Ringgit, including paying for their administrative or statutory expenses.

  More information on the accounting and tax considerations of a Labuan PSO company is available on this page.

• Legal and compliance considerations

  • Prior approval is required from Labuan FSA for companies engaging in activities including i) Islamic financial services ii) banking iii) insurance iv) fund management v) leasing vi) factoring transactions and vii) accounting.
  • A Labuan PSO company requires at least one director and one secretary who are both resident in Labuan. Both positions can be held by the same individual. It also requires one shareholder who can be i) of any nationality and ii) an individual or a body corporate.
  • A Labuan PSO company must submit financial statements to an independent statutory annual audit.
  • All Labuan companies can freely conduct business with resident Malaysia companies and deal in Malaysian ringgit directly. Transactions with Malaysian residents no longer need to be notified to the Labuan FSA.
  • All PSO companies incorporated in Labuan carrying out any Labuan business activity must i) have a minimum number of full-time employees in Labuan and ii) satisfy the minimum required annual operating expenditure in Labuan.

  More information on the legal and compliance considerations of a Labuan PSO company is available on this page.

• Multi-currency corporate bank account opening considerations

  • More than 54 banks offer onshore and offshore banking in Labuan. Labuan banks are licensed by the Labuan FSA.
  • For multicurrency corporate bank accounts, we recommend OCBC Malaysia, Standard Chartered Bank, Maybank and CIMB.
  • Typical documents required to open a multicurrency account for a Labuan PSO company include i) copies of director’s passport ii) proof of address iii) company profile iv) director’s CV.
  • If the Labuan PSO company has only one director, Labuan banks will usually request for a resolution from the sole company director before processing the account application.

  More information on the banking considerations of a Labuan PSO company is available on this page.

• Our service packages

  • For a total engagement fee of US$43,500, Healy Consultants Group will project-manage the A to Z of your Labuan PSO set up. Total engagement period will be five months;
  • Our standard services package includes i) company registration ii) company secretary and registered address services iii) opening an international multicurrency corporate bank account iv) sourcing local employees and office space v) preparation of AML/CFT programmes and other required documents and vi) securing a PSO license with FSA;
  • Additionally, our Firm can offer multiple additional support services, including i) accounting and book keeping ii) merchant account opening and iii) setting up trusts and foundations;
  • Refer to attached pdf file to view updated sales invoice with our latest notes:

    View invoice PDF