Client Newsflash


On November 30, 2017, the Central Bank of Indonesia (Bank Indonesia – “BI”) issued BI Regulation No. 19/12/PBI/2017 on the Implementation of Financial Technology (the “BI Regulation”) in order to promote innovation in the financial sector; implement consumer protection, risk management and prudential principles; and maintain monetary and financial system stability and an efficient and safe payment system. The BI Regulation was further implemented through BI Board of Governors’ Regulation No. 19/14/PADG/2017 on Financial Technology Regulatory Sandbox and BI Board of Governors’ Regulation No. 19/15/PADG/2017 on Procedures for Registration, Delivery of Information and Supervision of Financial Technology Organizers.

♦  Scope of Financial Technology

Financial Technology under the BI Regulation is classified into the following:

  1. payment systems;
  2. market support;
  3. investment management and risk management;
  4. lending, financing, and capital raising; and
  5. other financial services.

A Financial Technology Operator (an “FTO”) shall be subject to the BI Regulation if it provides Financial Technology with the following criteria: innovative; may impact existing products, services, technology and/or financial business models; provides benefit to society; is widely used; and other criteria which may be stipulated by Bank Indonesia (a “Qualified FTO”).

♦  Registration Requirement

A Qualified FTO that has or will be carrying out activities under the BI Regulation shall be in the form of a business entity and must register itself with BI. FTOs providing Payment System Services shall be in the form of an Indonesian legal entity.

Payment System Service Organizers that have obtained a license from BI are excluded from the registration requirement, but are still obligated to inform BI of any new products, services, technology, and/or business models fulfilling the criteria of Financial Technology. An FTO that is under the authority of another institution is also excluded from the registration requirement; however if the FTO conducts Financial Technology in the payment system sector, it must register with BI.

♦  Obligations and Restrictions

In the spirit of protecting the interests of key stakeholders, FTOs are expected to observe consumer protection principles, maintain the confidentiality of consumer and transaction data, and implement risk management and prudential principles, including anti-money laundering and prevention of terrorism funding.

The BI Regulation also obliges FTOs to use Rupiah in every transaction within the Republic of Indonesia and prohibits any payment system activities using virtual currency.

In addition, the BI Regulation requires prior approval from BI for any cooperation between Payment System Service Providers and registered FTOs. Payment System Service Providers are prohibited from cooperating with FTOs that are not registered and/or licensed with BI.

♦  Regulatory Sandbox

BI has created the Regulatory Sandbox to provide FTOs the opportunity to ensure that their products, services, technologies, and business models fulfill the criteria stipulated under the BI Regulation. Registered FTOs will use the Sandbox to present their business models and risk management plans, required documents and trial scenarios for their products, services, technologies and business models.

The Regulatory Sandbox trial program will run for six months, which may be extended once upon written request from the relevant FTO. After such period, BI will determine the success of the trial.

Specifically for FTOs conducting payment system services, if the Regulatory Sandbox trial is successful, the relevant FTO shall first apply for a license as a Payment System Service Organizer before being able to carry out their business operations. For FTOS in categories other than payment system services, Bank Indonesia may convey the result of the Regulatory Sandbox trial to the relevant institutions.

♦  Non Payment Systems FTOs

The scope of financial technology under the BI Regulation also covers non payment systems FTOs. This means that FTOs (other than ones who are involved in the payment systems services) fulfilling the criterias as set out in the regulation  may also register with BI, although not all of them will be selected by BI to join this regulatory sandbox program.

Based on the foregoing, for FTOs that may not fall under the straightforward payment systems or lending services that are currently regulated under the prevailing laws and regulations, this BI Regulation could be an opportunity for them to be recognized by BI to carry out their operation.

December 15, 2017

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The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.

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