Approved in principle. Building toward licensure.
Kaadxpay has been granted an Approval-in-Principle (AIP) by the Labuan Financial Services Authority for a Payment System Operator licence. Payment services are not yet operational and will commence only upon final PSO licence issuance.
AUTHORISATION STATUS
Labuan FSA · Payment System Operator (pre-licensure)
An Approval-in-Principle (AIP) was granted to Kaadxpay Financial Solutions Pty. Ltd. on 16 January 2026 by Labuan FSA, authorising us to proceed toward operating as a Payment System Operator under Section 171 of the Labuan Financial Services and Securities Act 2010 (LFSSA). We are completing the six pre-licensure conditions stipulated in LFSA reference LFSA.700-14/LFA/PS/25/2026 (3), with a regulatory deadline of 20 July 2026. Cross-border payment services will commence only upon final PSO licence issuance.
- Authority
- Labuan Financial Services Authority (LFSA)
- Licence type
- Payment System Operator (PSO)
- Status
- Approval-in-Principle granted · final licence pending
- AIP reference
- LFSA.700-14/LFA/PS/25/2026 (3)
- AIP effective
- 16 January 2026
- Pre-licensure deadline
- 20 July 2026
- Scope
- Cross-border payment services (collections, payouts, FX, settlement) — to commence upon final licence issuance
REGULATORY FRAMEWORK
Built on globally-recognized standards.
Financial Services Act 2010
Malaysia's primary financial services framework. Governs payment services, capital adequacy, governance, and consumer protection.
Labuan FSSA 2010
Labuan-specific framework providing regulatory clarity for cross-border financial services with international standards.
FATF 40 Recommendations
Our AML/CFT program is built on FATF 40 — the global standard followed by 200+ jurisdictions.
FATF Travel Rule (R.16)
Cross-border transactions above threshold include sender/recipient data per FATF Recommendation 16.
COMPLIANCE PROGRAM
Five pillars of regulatory operation.
KYC/KYB
Tiered customer due diligence with enhanced due diligence (EDD) for high-risk customers and corridors.
AML monitoring
Real-time sanctions, PEP, and adverse media screening. Behavioral transaction monitoring with ML + rules engine.
Suspicious + cash reporting
STR and CTR generated and submitted to LFSA per regulatory thresholds and timelines.
Independent audit
Annual financial audit and AML compliance audit by independent third parties. Findings remediated and tracked.
Governance + board oversight
MLRO, Compliance Officer, and Risk Officer report to the Board. Regulatory matters escalate immediately.
ROADMAP
Phase 2: Crypto bridging (licence-pending).
When LFSA opens digital asset bridging under its DAS framework, we will apply for Phase 2 expansion. The current Labuan FSA Approval-in-Principle is scoped to fiat payment services only — no virtual asset services. Phase 1 capabilities are engineered and tested; services commence upon final PSO licence issuance.
FAQ
About our regulatory status & compliance
The questions we get most often from merchants and regulators.
Kaadxpay has been granted an Approval-in-Principle (AIP) by the Labuan Financial Services Authority (LFSA), effective 16 January 2026, for a Payment System Operator (PSO) licence. LFSA AIP reference: LFSA.700-14/LFA/PS/25/2026 (3). We are completing the six pre-licensure conditions stipulated by LFSA, with a regulatory deadline of 20 July 2026. Payment services are not yet operational and will commence only upon final PSO licence issuance.
An Approval-in-Principle (AIP) is a written approval from LFSA, issued before the final licence, confirming that the application meets the regulatory threshold and authorising the applicant to put operating infrastructure in place (paid-up capital, operational office, compliance framework, director/PO appointments). The full PSO licence is issued only after all pre-licensure conditions are met within six months and LFSA has conducted its verification visit; the official licence number is assigned at that point. Until then, Kaadxpay cannot represent itself as a "licensed payment system operator" or carry on Labuan payment system business.
Labuan FSA carries a FATF Tier-1 (Compliant) rating, the same tier as MAS (Singapore) and HKMA (Hong Kong). Advantages: cross-border-licensed entities pay 3% corporate income tax (or USD 5,000 flat / year, electable annually). Disadvantage: lower brand recognition than MAS. We chose Labuan because it offers the best compliance-depth + tax + corridor-recognition combination available within ASEAN.
After final licence issuance, customer funds will be held in segregated client trust accounts at Labuan FSA-approved custodian banks, fully separate from Kaadxpay operating capital. Reconciliation will run twice daily (account balance vs ledger + bank statement). Quarterly audits by Labuan FSA and annual statutory audit. Any customer will be able to request a Proof of Funds attestation post-KYC. These customer-protection arrangements are part of the LFSA-required operating framework.
We have built a complete FATF-standard Customer Due Diligence (CDD) framework: legal entity structure, UBO (Ultimate Beneficial Owner), source-of-funds documentation, sanctions screening (OFAC + UN + EU + local). High-risk industries / jurisdictions are routed through Enhanced Due Diligence (EDD). Real-time AML transaction monitoring is engineered and ready. These frameworks are a core LFSA pre-licensure review item and will become operational on PSO licence issuance.
The current PSO AIP does not cover crypto-to-fiat services. Once LFSA opens its Digital Asset Services (DAS) framework, we will apply for a Phase 2 licence upgrade, targeted post-H2 2026. Until then, the Kaadxpay platform is designed for fiat-to-fiat flows only — no crypto endpoints are exposed.
Want to verify our regulatory status?
Contact us for the AIP letter, LFSA reference details, or compliance programme documentation.