Financial Crime World

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Regulatory Framework in Indonesia

Main Regulatory Authorities

In Indonesia, several regulatory authorities play a crucial role in overseeing the financial sector. Below are the main regulatory bodies responsible for maintaining stability and promoting economic growth.

Central Bank

Overview of Bank Indonesia (BI)

  • Established on July 1, 1953, as Indonesia’s central bank.
  • Responsible for monetary policy, currency management, and banking regulation.

Objectives of BI

  • Attain and maintain Rupiah stability.
  • Control inflation.
  • Promote economic growth.

Financial Services Regulator

Overview of Otoritas Jasa Keuangan (OJK)

  • Established in 2011 to oversee the financial services sector.
  • Includes banks, capital markets, insurance, microfinance, and pension funds.

Objectives of OJK

  • Supervise and regulate financial institutions.
  • Protect consumers.
  • Prevent money laundering.
  • Promote financial stability.

Other Regulatory Bodies

Indonesian Stock Exchange (IDX)

  • Regulates securities trading and listing on the exchange.

Indonesian Clearing and Guarantee Corporation (KPEI)

  • Regulates clearing and guarantee services for securities transactions.

Indonesian Clearing and Guarantee Institution (LPS)

  • Regulates settlement of securities transactions.

Key Laws and Regulations

  • BI Law: Establishes the central bank’s authority and objectives.
  • OJK Law: Establishes the financial regulator’s authority and objectives.
  • Banking Law: Regulates banking activities, including licensing requirements and capitalization structure.
  • Capital Market Law: Regulates securities trading and listing on the exchange.

Scope of Regulation

Below are some of the key areas under regulation by these authorities:

  • Financial services institutions, including:
    • Banks
    • Capital markets
    • Insurance
    • Microfinance
    • Pension funds
  • Securities trading and listing on the exchange.
  • Clearing and guarantee services for securities transactions.
  • Settlement of securities transactions.