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Bank secrecy in the age of transparency: How much is too much?
Ensuring legal certainty and fairness by harmonizing the new OJK rule on bank secrecy and the PDP Law, along with clear and appropriate oversight by the Data Protection Agency, will be key to effective transparency and legal safeguards against potential risks.
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Stock illustration of personal data
(Shutterstock/Miha Creative)
T
he foundation of banking secrecy in Indonesia was laid with the enactment of Law No. 7/1992 on banking, later amended by Law No. 10/1998. These laws introduced the essential principle that banks are obligated to uphold the confidentiality of customer information. As regulatory frameworks increasingly emphasize transparency alongside privacy, however, the boundaries of bank secrecy are being redefined.
The newly enacted Financial Services Authority Regulation (POJK) No. 44/2024 on bank secrecy represents a significant regulatory update. It further solidifies existing exceptions to bank secrecy, allowing law enforcement, tax authorities and foreign regulators continued access to confidential banking data under specific conditions.
At a glance, these reforms align with global efforts to strengthen financial oversight. However, they also raise important legal and practical considerations. How can transparency be advanced while ensuring adequate protection for financial privacy? And what safeguards are in place to prevent potential misuse?
The push for greater financial transparency is not new. Over the years, changes in economic conditions, regulatory developments and technological advancements have necessitated adjustments to bank secrecy regulations.
Bank Indonesia’s previous regulation on bank secrecy was issued nearly 25 years ago. Since then, financial crimes have become more complex, regulatory expectations have evolved and digital banking has transformed the industry. The enactment of the Financial Sector Development and Strengthening Law (Financial Sector Law) in 2023 changed banking law and bank secrecy rules, leading to the issuance of POJK No. 44/2024.
While these reforms seek to enhance oversight and improve regulatory clarity, they also introduce new concerns. The scope of authority, procedural safeguards and alignment with the Personal Data Protection (PDP) Law require careful attention.
The regulation introduces 13 categories under which bank secrecy can be lifted. Some of these exceptions are clear-cut. For example, law enforcement agencies can access banking records in investigating money laundering and terrorism financing. Tax authorities may also request banking data for audits, while courts can mandate disclosures in bankruptcy or liquidation proceedings.
