Indonesia Invesment – Business Activities of Non-Bank Foreign Exchange and Money Remittance

Business man holding out dollar billsBackground

Business activities of non-bank foreign exchange is regulated under the Regulation of Bank of Indonesia No. 16/15/PBI/2014 on the Business Activities of Non-Bank Foreign Exchange (“PBI No. 16/2015”). The PBI No. 16/2015 was issued (i) by considering the business activity of foreign exchange as supporter of financial sector to support the achieving of stability of Rupiah value, and (ii) to create the good governance in this business activity and to prevent this business to be used as a vehicle of money laundering and funding of terrorism.

General Provisions

There are 2 (two) business activities conducted by the operator of Business Activities of Non-Bank Foreign Exchange (Pelaksana Kegiatan Usaha Penukaran Valuta Asing Bukan Bank/”Operator Non-Bank KUPVA”) as follows:

  1. exchange activity conducted by sale and purchase of Foreign Banknotes (Uang Kertas Asing/”UKA”); and
  2. purchasing of Travelers Check (Cek Pelawat/”CP”).

Sale and purchase transaction as mentioned in letter a and b shall be (i) surrendered physically for UKA, and (ii) surrendered physically or by interbank or between-bank transfer for Rupiah as long as it is originated from or addressed to the account of operator of Non-Bank KUPVA.

When carrying out the business activity of non-bank foreign exchange, an Operator of Non-Bank KUPVA is obliged to:

  1. implement the provisions of anti-money laundering and combating the financing of terrorism;
  2. record the transactions in accordance with applicable accounting standards; and
  3. maintain the documents and slips related to the recording of transaction.

License

Operator of Non-Bank KUPVA must obtain Business License on Non-Bank Foreign Exchange Traders (Izin Usaha Pedagang Valuta Asing Bukan Bank/IUPVA) issued by Bank Indonesia. Requirements to obtain the IUPVA are as follows:

a. it must be a legal entity in the form of a limited liability company in which its shares are wholly owned by (i) an Indonesian citizen and/or (ii) a business entity in which its shares are wholly owned by Indonesian citizens;

b. stating that the purpose and objective of the company in the articles of association of the company is to conduct trading activities of UKA and purchasing the CP;

c. fulfill the amount of paid-up capital set out by Bank Indonesia, namely (i) at least Rp. 250,000,00.- (two hundred and fifty million Rupiah) for the IUPVA applicant located at DKI Jakarta, Kotamadya Denpasar and Kabupaten Badung, and the Kotamadya Batam; or (ii) at least Rp. 100,000,000,- (one hundred million Rupiah) for the IUPVA applicant located outside DKI Jakarta, Kotamadya Denpasar and Kabupaten Badung, and Kotamadya Batam; and

d. the paid-up capital does not come from the loan and/or for the purpose of money laundering.

Operator of KUPVA whose obtains the IUPVA is obliged to:

  1. conduct its business activities within 30 (thirty) days from the date of issuance of IUPVA. The implementation of KUPVA shall be reported to Bank Indonesia no later than 10 (ten) business days from the date of the implementation of IUPVA. If within the said period the Organizer of KUPVA does not implement the IUPVA, then IUPVA which have been issued shall become null and void.
  2. submit a report to Bank Indonesia that includes periodical reports and incidental reports. Submission of periodical reports is submitted online through the website of Commercial Bank Head Office Report (Laporan Kantor Pusat Bank Umum/”LKPBU”) of Bank of Indonesia. As for incidental report is submitted in writing to Bank of Indonesia.

The Organizer of KUPVA that violates the provisions of PBI No. 16/2014 may be imposed to administrative sanctions in the form of (i) a written warning, (ii) fines, (iii) cancellation of the license, (iv) the suspension of business activities, and/or (v) revocation of business licenses.

 

Conducting Money Remittance Business by the holder of IUPVA

The holder of IUPVA may also conduct Money Remittance business by obtaining Business License on the Operator of Money Remittance (Izin Usaha Penyelenggara Kegiatan Usaha Pegiriman Uang/ “IUKUPU”) issued by Bank Indonesia.

Requirements to obtain the IUKUPU by the operator of money remittance business (Penyelenggara Kegiatan Usaha Pengiriman Uang/ “Penyelenggara KUPU”) are as follows:

1.it must be Indonesian legal entity;

2.submit application of IUKUPU in writing to Bank Indonesia;

3.completing the document related to the institutional conditions which shall be made in Indonesian language, are as follows:

  • copy of deed of establishment of the company stating that the one of the business activities of the company is fund transfer, as well as its approval from Ministry of Law and Human Rights of Republic of Indonesia;
  • original document of letter of domicile (Surat Keterangan Domisili Perusahaan);
  • original document which shows the latest composition of the board of directors, the board of commissioner, and the shareholders;
  • original document of statement letter of each member of the board of directors and board of commissioners;
  • transfer receipt of capital in which the minimum capital for (x) the applicant that provide the system which can be used by other Organizer of KUPU must at least Rp. 500,000,000.- (five hundred million Rupiah), or (y) the applicant that does not provide system which can be used by other Organizer of KUPU must at least Rp. 100,000,000,- (one hundred million Rupiah);
  • document which shows the financial condition of the applicant in the form of (x) financial report of the applicant of the latest 3 (three) years for the applicant which already exist for more than 3 (three) years, (y) financial report of the applicant of the latest 2 (three) years or less for the applicant which already exist for less than 3 (three) years, and (z) financial report, financial balance, list of active and passive, or other documents which shows the financial condition for the newly established company.

4. completing the document related to the institutional conditions which shall be made in Indonesian language, are as follows:

  • written policies and procedure which includes (x) the implementation of Fund Transfer, both for sending and receiving, which has implemented the principle of tiered, (y) monitoring of the sent and/or received fund; and (z) the implementation of consumer protection principle in accordance with the law;
  • mechanism of the implementation of risk management which includes finance risk, operational risk, and legal risk;
  • written policies and procedures regarding the implementation of anti-money laundering and prevention on the terrorism financing in accordance to the law;
  • evidence of the operational readiness which at least includes the technical aspect (infrastructure and communication system), manpower (organizational structure, description of duties and responsibilities), and the readiness of business place;
  • evidence of the security and reliability of the system or mechanism of the implementation of Fund Transfer, at least in the form of copy of technology audit report from internal or external auditor for applicant that provides the system which can be used by other Organizer of KUPU, or original statement letter of the board of directors and board of commissioners regarding the security and reliability of the system or mechanism of the implementation of Fund Transfer for the applicant which does not provide the system that can be used by other Organizer of KUPU;
  • concept of the cooperation agreement with other Organizer of KUPU and/or other party on the implementation of the Fund Transfer, including the cooperation of cash monetizing place (if any);
  • description of the information of branch office, identity of the other Organizer of KUPU and/or other party which cooperated with the related Organizer of KUPU, including the information of the cash monetizing place (if any); and
  • written policies and procedures on the effective disaster recovery plan and business continuity plan to overcoming and minimizing problems arising from unforeseen events that can disrupt the smooth operation of the organization of Fund Transfer.

5. the board of directors and the board of commissioners of the applicant must have good integrity, as follows:

6. having good moral;

7. having commitment to comply with the prevailing laws; and

  • having commitment on the development of the implementation of the Fund Transfer business by the applicant;

in which the above mentioned requirements must be stated in the statement letter of the board of directors and board of commissioners. The statement letters shall be made in Indonesian language.

Maximum Nominal Value of Money Remittance from and to Abroad

PBI No. 14/2012 states that the Bank of Indonesia has the authority to set a limit on the nominal value of the Funds Transfer from and to abroad which conducted by the company who obtains IUKUPU, in which the said regulation states that it will be set further on the Circular Letter of Bank of Indonesia. However, to date there is no Circular Letter of Bank of Indonesia that has been issued to set the limitation on the nominal value of Fund Transfer.

Business Activity Area of Non-Bank Foreign Exchange and Money Remittance

The operator of KUPVA (which also conduct KUPU) may conduct its business activities elsewhere, though the application of IUPVA and IUKUPU are filed in one place.

Under the PBI No. 16/2014, Organizer of KUPVA can open a branch office of PVA in a place other than where Organizers of KUPVA’s head office is located by obtaining prior approval from Bank Indonesia. The opening of branch office of Organizers of KUPVA must fulfill capital requirements, the feasibility of the location, and the readiness of the opening of branch offices as well as the fulfillment of compliance with applicable regulations. The documents which shall be submitted by the Organizer of KUPVA’s headquarters to open a branch office are as follows:

  1. photocopy of evidence of ownership of business premises as a branch office on behalf of the company, shareholders, members of the Board of Commissioners and/or members of the Board of Directors, or lease agreement or other form for the use of business premises as a branch office;
  2. sufficiently stamped statement letter from members of the Board of Directors that the planned branch office is a unit of business activity that is inseparable from the Organizer of KUPVA’s head office;
  3. photocopy of letter of domicile of the place of business issued by the government authorities for each branch office; and
  4. the organizational structure of the branch office.

For the Operator of KUPVA which will open a branch office in DKI Jakarta, Kotamadya Denpasar and Kabupaten Badung as well as Kotamadya Batam, the paid-up capital of the company must at least be Rp 250,000,000.- (two hundred and fifty million Rupiah). Letter of application for business license as referred to in number 1 is signed by the Board of Directors of the company and submitted to the Bank Indonesia.

If the Operator of KUPVA intends to open the PVA’s outlet outside office of Operator of KUPVA, the requirements that must be fulfilled are as follows:

  1. the opening of the outlet must be in the same region as the area of the headquarters and/or branch offices of Organizers of KUPVA;
  2. in order to meet specific needs, for example in a tourism exhibition and/or in pilgrim hostel at the time of implementation of the pilgrimage; and
  3. period of the opening of outlets (counter) of PVA set a maximum of 1 (one) month and can be extended for 1 (one) times longer than 1 (one) month.

Rizky Natalia

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