Indonesia’s OJK Takes Central Role in Probing Financial Crimes

Indonesia’s financial regulatory body, the Financial Service Authority (OJK), has been awarded new powers to investigate financial crimes under the recently passed Law Number 4 of 2023, also known as the “P2SK Law.” This regulation elevates the OJK’s role in financial crimes investigation, marking a significant shift in the country’s regulatory landscape.

Expanded Mandate for OJK

According to the P2SK Law, the OJK is now authorized to investigate financial crimes in the financial services sector and conduct on-site inspections. This enhancement underscores a meaningful evolution of OJK’s functions from advisory and supervisory roles to direct enforcement actions.

New investigation powers
On-site inspection authority

Consequences for Financial Crimes

The new law introduces fines and administrative sanctions for individuals and legal entities found guilty of financial crimes. Penalties can include:

Infringements of capital market rules: fines ranging from IDR 50 million to IDR 1 billion
Administrative penalties: license revocation or suspension

Compliance Requirements for Financial Institutions

Financial institutions are expected to collaborate with OJK’s investigations and submit requested documents. Failure to comply may result in:

Administrative sanctions

Importance of Internal Controls and Whistleblower Protection

The regulation emphasizes the significance of internal controls and whistleblower protections to prevent and report financial crimes. These measures aim to strengthen the sector’s integrity and promote a culture of compliance.

Strengthening Indonesia’s Financial Regulatory Framework

The OJK’s new role corresponds to Indonesia’s broader initiatives to fortify its financial regulatory framework and minimize associated risks. The regulator’s expanded powers to probe financial crimes play a key role in:

Enhancing transparency
Fostering trust
Upholding financial sector stability