Indonesia’s Financial Regulatory Landscape: A Guide to Licenses and Regulations
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Indonesia has a complex financial regulatory landscape that governs the operations of financial institutions and individuals involved in financial activities. In this guide, we will outline the licenses and regulations required for entities operating in the Indonesian financial industry.
Overview of Regulators
The country’s central bank, Bank Indonesia (BI), and the Financial Services Authority (OJK) play crucial roles in overseeing the financial sector. The OJK is responsible for regulating and supervising all financial institutions, including banks, insurance companies, and other non-bank financial institutions.
Licenses Required for Financial Institutions
To operate in Indonesia’s financial industry, individuals and entities must obtain necessary licenses from the OJK. The following licenses are required:
- Representatives of securities companies, broker dealers, underwriters, and investment managers
- Mutual fund agent sales representative license for those who intend to sell mutual funds or other investment products
Fintech Regulation
Fintech companies operating in Indonesia are subject to a separate regime. While they can start operating before being recorded with the OJK or BI, they must undergo a regulatory “sandbox” process to determine whether they may continue to operate without a specific license from the OJK or BI.
Key Areas of Regulation
The main areas of regulation for financial institutions under the supervision of the OJK and BI include:
- Scope of business activities
- Capitalization and shareholding requirements
- Licensing and registration
- Good corporate governance
- Level of soundness
- Fit and proper test requirements
- Data privacy and protection
- Risk management
- Consumer protection
- Anti-money laundering and combating the financing of terrorism
Additional Requirements
Financial services firms may also be subject to additional requirements imposed by self-regulatory bodies, professional associations, or other financial organizations. For example:
- Peer-to-peer lending companies must comply with the code of conduct of the Indonesian Joint Funding Fintech Association, which includes rules on maximum interest rates and repayment periods
Important Dates
The information provided above is accurate as of January 21, 2021.
By understanding Indonesia’s financial regulatory landscape, you can ensure compliance with relevant laws and regulations and avoid potential penalties or fines.