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Fintech monitored for money laundering
Eni V
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Eni V. Panggabean (Antara)
Bank Indonesia (BI) has moved to enhance monitoring of suspected money-laundering activities and terrorism funding in financial technology (fintech) operators and money changers, through revised regulations.
The policy has been issued as criminals have targeted financial services in Indonesia that are poorly monitored, such as money changers and fintech services, as they can use them to channel illicit funds without getting caught.
Aware of the need to strengthen monitoring, BI and the National Police in the past few months required owners of all money changers to register for a license if they wished to continue operating.
The central bank did not stop there. It issued earlier this month Regulation No. 19/2017, which aims to curb money laundering and terrorism-funding activities related to non-bank entities offering payment systems.
These non-bank operators, such as fintech and e-wallet, have been mushrooming in the country recently.
The new rule, which revises two previous regulations on similar issues in 2010 and 2012, was created based on BI’s findings that a financial sector with more complex products, services and business models would be at greater risk of falling victim to criminal acts.
“[The previous regulations] needed enhancements to accommodate various developments in the industry today, especially in fintech and the digital economy [...],” said Eni V. Panggabean, BI’s executive director of payment system policy and supervision, in a media briefing on Wednesday.
The new regulation, which will be fully imposed in six months, requires non-bank payment system operators to implement prevention measures against money laundering and terrorism funding.
For instance, industry players are obliged to conduct customer due diligence (CDD) and report to the Financial Transactions Report and Analysis Center (PPATK) if they detect suspicious or irregular transactions.
The players are also obliged to conduct a “freezing without delay” measure on suspicious accounts with the assistance of the National Police and the Supreme Court.
Such an enhancement in regulation and supervision to fight money laundering is part of the country’s compliance with the recommendations set by the Financial Action Task Force on Money Laundering (FATF), an intergovernmental body formed by the G20 countries including Indonesia.
The number of fintech businesses operating in Indonesia soared to 135 last year from only 51 firms recorded as of the first quarter of 2016, Financial Services Authority (OJK) data show.
Indonesia Fintech Association deputy chairman Adrian Gunadi was confident that the new rule would not hamper fintech development as the players were prepared to prevent money laundering practices from occurring using their technological innovations, such as face recognition, fingerprint scanning and geotagging.
“Various technologies for applicable EKYCs [electronic know your customers] are available overseas. Several fintech firms seem to adopt it to comply [with local regulations].”
