Regulation of Bank Indonesia Number 18/20/PBI/2016 on Business Activities of Non-Bank Foreign Exchange - Bank Sentral Republik Indonesia
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August 21, 2019
SUMMARY OF REGULATION OF BANK INDONESIA
 
Regulation
:
Regulation of Bank Indonesia Number 18/20/PBI/2016 on Business Activities of Non-Bank Foreign Exchange
Effective Date
:
From 7 October 2016
 

Summary:

1. Regulation of Bank Indonesia Number 18/20/PBI/DKSP dated 7 October 2016 on Business Activities of Non-Bank Foreign Exchange is issued to improve Regulation of BI No.16/15/PBI/2014 on Business Activities of Non-Bank Foreign Exchange and to align it with other regulations issued by Bank Indonesia. This regulation issuance aims to provide more explicit guideline for implementation of business activities of non-bank foreign exchange. This improvement is expected to be able to increase good governance and boost sounder and more efficient development of non-bank foreign exchange industry. Improvement is made to: 1) scope of business activities, 2) underlyingtransactions, 3) procedures and requirements for licenses, 4) governance and customer protection, and 5) selling and buying of foreign banknotes in border areas and cooperation with hotels.

2. This regulation has the following contents:

    a. scope of business activities, which may be conducted by Money Changers;
    b. requirements for licenses to be fulfilled by Money Changers;
    c. authority of Bank Indonesia to limit license grant and evaluate licenses;
    d. determination of exchange rates of foreign banknotes by Money Changers;
    e. requirements for candidates of management and shareholders of Money Changers;
    f. application of customer protection;
    g. cooperation with other parties in providing foreign banknotes selling service;
    h. other parties permitted to sell and buy foreign banknotes in border areas; and
    i. obligations of Money Changers to have bank accounts under their names.
    3. Business activities of foreign exchange consist of exchange under the mechanism of selling and buying foreign banknotes and buyingTraveler’s Checks. In addition, Money Changers may also carry on other business activities relating to foreign exchange on condition that they are specified in the regulation ofBank Indonesia.
     

    4. Underlying transactions in Non-Bank Foreign Exchange implementation must comply with the following:

      a. Buying foreign banknotes above a certain threshold per month per Customer of Money Changers must have underlying transactions.
      b. The threshold per month per Customer refers to the provisions of Bank Indonesia on transactions of foreign currencies against Rupiah between banks d domestic parties, and provisions of Bank Indonesia on transactions of foreign currencies against Rupiah between banks and foreign parties.
      c. Documents to be submitted in transactions, for which underlying transactions are mandatory,are justifiable documents and supporting documents for foreign banknotes purchase.
      d. Money Changer must ensure that a Customer has submitted justifiable documents for underlying transactions, supporting documents for foreign banknotes purchase, and power of attorney if the Customer is represented by another party, and must administer those justifiable and supporting documents.

     

    5. In determining exchange rates, Money Changers have the following obligations:
      a. have written policy and procedure for exchange rate determination;
      b. use accountable and consistently applied basis for exchange rate determination; and
      c. maintain records and/or worksheets in exchange rate determination.

      6. Money Changers must ensure the following minimum application of customer protection principles:

        a. delivery of exchange rate information to Customers in a transparent manner;
        b. protection of Customers’ data and/or information; and
        c. effective handling and settlement of Customer’s complaints.

        7. Licenses for Money Changers are governed as follows:

          a. Money Changer must meet the following requirements:
            1) has the form of a legally incorporated Limited Liability Company whose all shares are owned by Indonesian citizens and/or a company whose all shares are owned by Indonesian citizens;
            2) specify in their articles of association that the company’s purpose and objective are conducting the selling and buying of foreign banknotes and buying of traveler’s checks; and
            3) meet the paid-up capital amount as determined by Bank Indonesia, the capital of which is not sourced from and/or aimed for money laundering.
              b. Bank Indonesia grants license as a Money Changer in the following phases:
                1) scrutiny of institutional requirements fulfillment;
                2) scrutiny of fulfillment of requirements as members of the Board of Directors, members of the Board of Commissioners, and shareholders;
                3) examination of business premises of Money Changer candidates; and
                4) dissemination of the provisions.

              8. License as Money Changer issued by Bank Indonesia is valid for 5 (five) years as of the license grant date and may be extended by submitting an application to Bank Indonesia. Bank Indonesia will evaluate licenses issued for Money Changers.

              9. Provisions for the bank account of a Money Changer are as follows:

                a. Money Changer must have a bank account under their name.
                b. The bank account may only be used for business and operational activities as a Money Changer.

                10. Opening of Money Changer’s branch office must obtain prior approval of Bank Indonesia by meeting the requirements for capital, location viability, and branch office opening readiness. 11. Provisions for supervision and implementation report on Non-Bank Money Exchange are as follows:

                  a. Bank Indonesia makes direct and indirect supervision of activities conducted by Money Changers.
                  b. Money Changers must submit periodic and incidental reports to Bank Indonesia.

                  12. In certain areas, Money Changers may cooperate with hotels or companies carrying on activities similar to hotels to conduct the selling and buying of foreign banknotes with the approval of Bank Indonesia.

                  13. Parties other than Money Changers in the form of companies selling and buying foreign banknotes in the border areas of Indonesia must obtain the approval of Bank Indonesia.

                  14. Any party, which has conducted foreign currency exchange activities without obtaining any license from Bank Indonesia, must apply for license as Money Changer by fulfilling easier requirements as specified in the old Regulation of BI No. 16/15/PBI/2016 on Business Activities of Non-Bank Foreign Exchange. In addition, such party will not be imposed with any sanction during the license process facilitation, which takes effect for 6 (six) months as of the enforcement of Regulation of BI on Non-Bank Foreign Exchange.

                  15. If after the period of 6 (six) months mentioned above, Bank Indonesia finds that any party conducts foreign exchange business activities without the permit of Bank Indonesia, then Bank Indonesia may recommend the competent authority to revoke the business license and/or terminate the business activities or take stricter steps under the applicable laws and regulations.

                  16. This Regulation repeals Regulation of BI Number 16/15/DKSPdated 11 September 2014 on Business Activities of Non-Bank Foreign Exchange.

                  17. This Regulation starts to take effect from 7 October 2016.

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