With attachment:
- Elucidation of Bank Indonesia Regulation No.14/27/Pbi/2012 [PDF]
- FAQ [PDF]
I. BackgroundThe existence of national, regional and global level dynamics, accompanied by the development of increasingly complex bank products, activities and information technology, has increased potential opportunities for criminals to abuse such banking facilities and products as a means to launder money and finance terrorism, with an increasingly sophisticated modus operandi.
In addition, the Financial Action Task Force (FATF) Recommendations were adjusted to become more comprehensive in supporting efforts to prevent money laundering and combat terrorism financing.
Against this backdrop, the existing Bank Indonesia Regulation on the implementation of anti-money laundering and combatting the financing of terrorism by commercial banks was deemed to require harmonization with prevailing regulations and international standards. Adjustments to the regulation include:
a. Provision for fund transfers.
b. Provision for high-risk areas.
c. Provision for simple Customer Due Diligence (CDD), in particular to bolster support for the national and global financial inclusion strategy.
d. Provision for Cross-Border Correspondent Banking.
II. Specifics of the Regulation1. Active supervision of the Board of Directors and Board of Commissioners.
Active supervision of the Board of Directors shall at least include:
a. ensuring the Bank has policies and procedures in place for the anti-money laundering and combatting terrorism financing (APU and PPT) program;
b. recommending policies and procedures for the APU and PPT program to the Board of Commissioners;
c. ensuring implementation of the APU and PPYT program is pursuant to established written policies and procedures;
d. establishing special units assigned to implement the APU and PPT program and/or appointing an officer duly responsible for the APU and PPT program at Head Office;
e. supervising the compliance of work units in implementation of the APU and PPT program;
f. ensuring that branch offices have a special unit established and have:
i) employees who can perform the function of the special work unit; or
ii) officers who supervise the implementation of the APU and PPT program.
g. ensuring that branch offices with high business complexity meet the requirements referred to in item f above and are separated from the work unit that implements the policies and procedures of the APU and PPT program.
h. ensuring that the written policies and procedures of the APU and PPT program are in line with changes in the development of Bank products, services and technology as well as applicable to prevailing methods of money laundering and terrorism financing.
i. ensuring that all employees, in particular employees of related work units and new employees, have participated in regular training relating to the APU and PPT program.
Active supervision of the Board of Commissioners shall at least include the following:
a. approval of implementation policy for the APU and PPT program; and
b. supervision of the assigned responsibilities of the Board of Directors in terms of APU and PPT program implementation.
2. Policies and Procedures:
In the implementation of the APU and PPT program, Banks are required to have guidelines containing written policies and procedures as follows:
a. Requests for information and documentation;
b. Beneficial Owner;
c. Document verification;
d. A simplified CDD;
e. Termination of relationship and transaction refusal;
f. Provision for high-risk areas and PEP;
g. CDD implementation by a third party;
h. Updating and monitoring;
i. Cross-border correspondent banking;
j. Fund transfers;
k. Document administration; and
l. Reporting to PPATK (The Indonesia Financial Transactions and Report Analysis Center).
3. Internal Control:
Banks shall have an effective internal control system. To ensure the effective implementation of the APU and PPT program by Banks, Banks are required to optimize their existing internal audit work units, among others, through compliance testing (including sample testing) of the policies and procedures relating to the APU and PPT program. Implementation of an effective internal control system shall be evidenced by, among others:
a. adequate policies, procedures and internal monitoring;
b. establishing boundaries and the scope of authority of each work unit linked to the APU and PPT program; and
c. conducting assessments to ensure the efficacy of APU and PPT program implementation by the internal auditor.
4. Management Information System:
Banks shall be required to apply an information system that enables effective identification, analysis, monitoring and reporting of transaction characteristics performed by the Banks Customers. The information system shall facilitate analysis of individual transactions as required, either internally or by Bank Indonesia, or indeed in relation to any ongoing legal proceedings.
In addition, Banks shall hold and maintain integrated Single Customer Identification Files, consisting of a customer data profile that covers all the accounts owned by an individual customer at a Bank, including savings accounts, term deposits, checking accounts and loans as well as a WIC profile.
5. Human Resources and Training:
In order to prevent Banks being used as a medium or destination for money laundering or a means to finance terrorism, Banks shall perform the following:
a. pre-employee screening when recruiting new employees; and
b. introduction and monitoring of employee profiles. Exploiting banking services as a means to launder money and finance terrorism may possibly involve a Banks employees. Therefore, Banks are required to apply Know Your Employee (KYE) principles in order to prevent or detect incidences of money laundering through Banks, which involve pre-employee screening as well as the introduction and monitoring of profiles consisting of the character, behaviour and lifestyle of the employee.
Banks are required to organise ongoing training activities concerning:
a. the implementation of laws and regulations associated with the APU and PPT program;
b. the techniques, methods and typologies of money laundering and terrorism financing; and
c. the policies and procedures associated with the implementation of the APU and PPT program as well as the roles and responsibilities of employees in terms of eradicating money laundering and terrorism financing activities.
6. APU and PPT program implementation for domestic Bank branches and subsidiaries in foreign jurisdictions.
In this case, the following regulations are applicable:
a. Banks legally incorporated in Indonesia shall forward their corresponding policies and procedures associated with the APU and PPT program to their foreign branch offices and subsidiaries as well as monitor implementation.
b. In the event that the host country imposes more stringent APU and PPT regulations, the affected branch office shall adhere to the provisions issued by the authority in the host country.
c. In the event that the host country has not ratified the FATF Recommendations, or has but to a lesser degree, the branch office shall apply the APU and PPT program stipulated in the Bank Indonesia Regulation.
d. In the event that implementation of the APU and PPT program, as referred to in this Bank Indonesia Regulation, would result in violations of prevailing laws in the host country, the officer of the branch office shall be required to inform head office and Bank Indonesia.
7. Reporting:
In the implementation of the APU and PPT program, Banks shall be required to submit to Bank Indonesia the following:
a. An action plan for APU and PPT implementation as part of the report concerning execution of the duties of the Compliance Director in June 2013;
b. Guidelines for APU and PPT implementation as referred to Article 8 paragraph (1) no later than 6 (six) months after the promulgation of this Bank Indonesia Regulation;
c. A plan to update data submitted annually in December as part of the Directors Report concerning execution of the duties of the Compliance Director; and
d. A data updating realisation report submitted annually in December as part of the Directors Report concerning execution of the duties of the Compliance Director.
8. Sanctions
Administrative sanctions shall be imposed for failure to submit the reports or guidelines consisting of the following:
a. A financial penalty of Rp1,000,000 (one million rupiah) per day of the delay, amounting to a maximum of Rp30,000,000 (thirty million rupiah).
b. An administrative sanction consisting of a written warning and a financial penalty of Rp50,000,000 (fifty million rupiah).
In addition, Banks that:
a. fail to implement commitments to resolve the findings of Bank Indonesia auditors within 2 (two) audit periods; and/or
b. fail to implement the commitments conveyed in the action plan and/or data updating plan; and/or
c. fail to implement policies and procedures as stipulated in the implementation guidelines of the APU and PPT program, which have a significant detrimental impact on APU and PPT program implementation;
Shall be liable for administrative sanctions amounting to no more than Rp100,000,000 (one hundred million rupiah).
9. The promulgation of this Bank Indonesia Regulation supersedes Bank Indonesia Regulation Number 11/28/PBI/2009 on the implementation of anti-money laundering and combatting the financing of terrorism by commercial banks (State Gazette of the Republic of Indonesia of 2009 Number 106, Supplement to the State Gazette of the Republic of Indonesia Number 5032), which is revoked and declared no longer valid. Hereinafter, all Bank Indonesia regulations that refer to the regulation on anti-money laundering and combatting the financing of terrorism shall refer to this Bank Indonesia Regulation, unless stipulated.
