Financial Crime World

Regulatory Requirements for Fintech in Indonesia: Key Takeaways from OJK Regulation 3/2024

The Indonesian Financial Services Authority (Otoritas Jasa Keuangan or OJK) has issued a new regulation, No. 3 of 2024, on the Implementation of Technological Innovation in the Financial Sector. This article highlights the key points of this new regulation and its implications for fintech innovation providers (FIPs) in Indonesia.

Scope and Overview

The regulation aims to enhance OJK’s supervisory role over fintech innovation by implementing the prudential principle to maintain financial system stability, market integrity, and consumer protection. Fintech innovation providers (FIPs) are entities that operate within the digital financial ecosystem, offering products, services, or activities that involve technological innovation.

Key Requirements for FIPs

The following requirements must be met by registered FIPs:

Association Membership

  • Registered FIPs must join a designated association appointed by OJK.

Independent Evaluation

  • FIPs must conduct independent evaluations of their operations and activities.

Expertise in IT and Finance

  • They must have human resources with expertise in both information technology and finance.

Compliance Tools

  • FIPs must utilize tools to streamline OJK’s supervisory processes and ensure compliance.

Reporting Requirements

  • They are required to submit monthly, annual, and incidental reports to OJK.

Electronic System Strategic Plan

  • A strategic plan for their electronic system aligning with business plans must be developed.

Data Centre and Disaster Recovery

  • Data centres and disaster recovery facilities must be established within Indonesia.

Personal and Financial Data Integrity

  • The integrity and accessibility of personal, transactional, and financial data from receipt to disposal must be upheld.

Consumer Data Security

  • FIPs must maintain the confidentiality and security of consumer data and information.

Institutional Governance

  • Good institutional governance principles must be prioritized.

Anti-Money Laundering

  • Programs to combat money laundering, terrorist financing, and the proliferation of weapons of mass destruction within the financial services sector must be implemented.

These requirements are aimed at ensuring that fintech innovation providers operate in a manner that maintains the integrity of the Indonesian financial system, protects consumers, and upholds good governance principles. FIPs approved for participation in the sandbox must submit a business license application to OJK or register with them before submitting their business license application. The regulation sets out a framework for the regulation and supervision of fintech innovation implementation, including provisions for creating a testing environment (sandbox), licensing, monitoring, evaluation, financial education, consumer protection, personal data protection, institutional aspects, and FI activities conducted by third-party supporters.