Banking Crime
To ensure a sound banking industry that is trusted by the public, Bank Indonesia applies law enforcement against banking crime in cooperation with the Police Department and Attorney General. This is in accordance with implementation of the Indonesian Banking Architecture (IBA), in particular Pillar 3, namely to create a solid and competitive banking industry resilient to risk.
Bank Indonesia as the banking authority and pursuant to Act No. 23, 1999 regarding Bank Indonesia superseded by No. 3, 2004 (UU BI) and Act No. 7, 1992 amended by No. 10, 1998 concerning banks. Accordingly Bank Indonesia has the:
- right to license;
- right to regulate;
- right to supervise; and
- right to impose sanctions.
In line with the right to impose sanctions, Bank Indonesia, as the banking authority through a mechanism of supervision and guidance, can settle administrative matters and is authorized to impose administrative sanctions against a bank proven to conduct criminal business activity that deviates from prevailing regulations. The imposition of sanctions is handed to law enforcement in accordance with prevailing regulations.
Supervision and Law Enforcement are two inseparable components of the rule of law. Law enforcement would not exist without a supervision system and rule of law would not exist without adequate law enforcement. In terms of the banking system, supervision and law enforcement play a role in optimizing the banking function, thus creating a sound banking system, both as a whole and individually, and protect the interest of the public, develop naturally and benefit the national economy.
Referring to limited authority, under a framework of enforcing the law within the banking industry as well as safeguarding public funds and national wealth held at the banks, Bank Indonesia acknowledges the requirement for coordination with law enforcement officers to handle crime in the banking field. Through a joint decree between the Police Commissioner, Attorney General and Governor of BI, initiated on 6th November 1997 and renewed on 20th December 2004, the three institutes agreed to collaborate when handling allegations of banking crime. Through such cooperation, it is expected that each case of banking crime will be settled quickly, smoothly and optimally.
To support implementation of the joint decree and take repressive actions against violations, irregularities and infractions of prevailing regulations, in particular criminal elements in the banking field, Bank Indonesia formed a task force that handles banking criminal allegations. The establishment of DIMP is expected to have an announcement effect on the banking community, namely that law enforcement will be implemented and enforced with all forms of infraction bringing legal consequences on the perpetrator.
In its implementation, measures are required to smooth, expedite and optimize the handling of criminal allegations, so in 2007 technical guidelines were signed by the Deputy Attorney General for Special Crimes, Deputy Attorney General for General Crimes, Chief Criminal Investigator and the Deputy Governor of BI.
Since 1999 until the present day, 580 cases of criminal allegations against commercial banks and rural banks have been reported by Bank Indonesia to law enforcement through the mechanism laid out in the joint decree. Currently, 448 cases are being processed by law enforcement. These criminal cases represent a part of the banking cases reported by Bank Indonesia through the joint decree since 1999.
In addition to cooperation with law enforcement, Bank Indonesia also collaborates with the Commission for the Eradication of Corruption, the Deposit Insurance Corporation as well as the Report and Financial Transaction Analysis Center (PPATK).
Bank Mediation
As part of its duty to protect consumers, Bank Indonesia is implementing the Indonesian Banking Architecture (IBA), which includes Customer Protection as one of its pillars (Pillar 6). This pillar explains that banks are responsible for creating a standard mechanism for customer complaints that is clear and easy for the customer to understand; form an independent bank mediation institution to bridge the gap between banks and their customers; compile transparent product information and promote customer education in order to provide clear and adequate information empowering the general public to understand and comprehend bank products and services.
The bank mediation function of Bank Indonesia that began in 2006, was primarily implemented to bridge the gap between the interests of the banks and their customers as an alternative bank dispute settlement mechanism that protects the customer and maintains the reputation of the bank. At the time of reporting, Bank Indonesia had received 737 customer complaints at 71 banks. The majority of complaints related to payment system problems, channeling funds and raising funds.
Customers using banking products/services who experience a problem can file a complaint with the bank involved and expect settlement. If the customer is subsequently unsatisfied with the bank’s settlement, the customer can refer his/her complaint to the bank mediation function currently operated by Bank Indonesia.
The advantages of the bank mediation function are:
- voluntary;
- forward looking;
- interest based; and
- inexpensive, rapid and simple process
In the implementation of the mediation function, Bank Indonesia also cooperates with a number of other parties, including the banking industry (through the Bank Mediation Working Group), academics, practitioners and mediation institutions/associations.
