Financial Regulator Cracks Down on Risky Customers
In a move aimed at strengthening financial stability, Indonesia’s Financial Services Authority has issued new regulations requiring financial services providers in the capital market sector to conduct thorough customer due diligence (CDD) based on the level of risk associated with each potential customer.
Customer Classification and Due Diligence Requirements
Under the new rules, customers will be classified into three categories: low-risk, medium-risk, and high-risk.
- Low-Risk Customers: These include individuals or entities that are:
- Recipients of securities through employee stock ownership programs or public companies
- Government agencies and international organizations
- Medium-Risk Customers: These include individuals or entities that do not meet the low-risk criteria but have a moderate level of risk exposure. Medium-risk customers will be required to undergo a verification process, which includes:
- Comparing data with supporting documents
- Conducting face-to-face meetings
- Verifying business relations with third parties
- High-Risk Customers: These include individuals or entities that pose a significant threat to financial stability and require enhanced due diligence (EDD) measures, including:
- Comprehensive background checks
- Regular monitoring of their activities
Regular Review and Update of Customer Information
The regulations also stipulate that financial services providers must:
- Regularly review and update customer information to ensure accuracy and completeness
- Conduct CDD on existing customers if their risk level changes over time
“We are committed to ensuring the stability and integrity of Indonesia’s capital market,” said a spokesperson for the Financial Services Authority. “These new regulations will help us better identify and mitigate risks associated with high-risk customers.”
Effective Date and Scope
The regulations take effect immediately and apply to all financial services providers operating in the country’s capital market sector.
By implementing these new regulations, the Financial Services Authority aims to strengthen financial stability and ensure the integrity of Indonesia’s capital market.