Presentation on theme: "Directorate of Banking Research & Regulation BANK INDONESIA"— Presentation transcript:
1Directorate of Banking Research & Regulation BANK INDONESIA BANK INDONESIA, ANTI MONEY LAUNDERING AND KNOW YOUR CUSTOMER PRINCIPLESDirectorate of Banking Research & RegulationBANK INDONESIA
2Background Act regarding Bank Indonesia: Authority to formulate monetary policy.Authority to regulate & saveguard payment system.Authority to regulate and supervise bankAs bank supervisor, BI is responsible for the supervision of implementation of AML, includes implementation of KYC.BI also authorized to supervise non-bank money changer and money remittance.
3REFERENCE SOURCES25 Core Principles for Effective Banking Supervision, 1997, Basel Committee on Banking Supervision, BISA Bank has to implement KYC in order to prevent money laundering practicesCustomer Due Diligence for Banks, 2001, Basel Committee on Banking Supervision, BISKYC Implementation includes customer acceptation policy, customer identification, customers’ monitoring transactions and risk management40 FATF Recommendations on Money LaunderingThe financial institution has to perform customer due diligence and record keeping, reject any correspondence relation with shell banks and report any suspicious transactionThe financial institution has to be regulated and supervised as well as implementing FATF recommendations effectively
4REFERENCE SOURCES 8+1 FATF Recommendations on Terrorist Financing The financial institution is obligated to report any suspicious transaction if it identifies any funds that is related to terrorist activitiesThose international standard rules are being described on Bank Indonesia Regulation (PBI) No. 3/10/PBI/2001 on 18 June 2001 regarding Know Your Customer (KYC) principles implementationUU No. 15 Tahun 2002 regarding Money Laundering Activities as been changed with UU No. 25 Tahun 2003Financial service provider is obligated to ask for customer identification, do record keeping and report any suspicious activities to PPATKFinancial service provider is obligated to do record keeping
5KYC REGULATION & GUIDELINES FOR BANKING PBI No. 3/10/PBI/2001 on 18 June 2001 regarding Know Your Customer (KYC) Principles Implementation for General Bank as been changed with PBI No. 2/23/PBI/2001 on 13 December 2001 and PBI No. 5/21/PBI/2003 on 17 October 2003PBI No. 5/21/PBI/2003 on 23 October 2003 regarding Know Your Customer (KYC) Principles for Rural Bank (BPR)Circular Letter (SE) No. 2/23/DPNP on 13 December 2001 regarding Standard Guidelines of Know Your Customer (KYC) Principles Implementation as been changed with Circular Letter No. 5/32/DPNP on 4 December 2003Circular Letter No. 6/37/DPNP on 10 September 2004 regarding Assessment and sanction imposition of Know Your Customer (KYC) Principles Implementation and Other Legal Responsibility related to the Regulation of Money Laundering Illegal Practices
6Authority & Task in Banking Sector Granting & revoking licenses of commercial bank, rural bank, islamic bank, & non bank money changer.Conducting F&P of candidates controlling shareholders & bank management.Prescribing prudential regulations for bank, including requirements to implement AML/KYC.Supervision & examination.Assisting PPATK (FIU) whenever requested to provide info & to conduct special examination.
7SUPERVISION ORGANISATION BI has five specialized inspection directorates for on site examination of banks. Examination and evaluation of KYC/ AML is conducted by using a standard template called the Assessment Working Paper.
8Organization Structure & Statistic DirectorateNumber of SupervisorBankNumberTotal Asset (trillion)Directorate of Bank Superision 114025744.7Directorate of Bank Superision 213229389.8Directorate of Bank Superision 331384.8Directorate of Syariah Banking2013330.2Directorate of Rural Bank Supervision80182224.7BI’s Branch Office40036
9EXAMINATION AND SANCTION In order to minimize a different perception among supervisors in conducting AML/CFT Examination, BI has issued examination guidance (No.VI/37/DPNP 2004) on AML/CFT.To persuade whether one bank have already comply with regulation on KYC and AML effectively and consistently, is needed to supervise and impose sanction for non compliant banks. Banks are rated on a scale of 1 to 5. The banks that are given rating 5 are subjected to administrative sanctions and downgrade in respect of their financial health
10EXAMINATION AND SANCTION During January through June 2007, BI conducted KYC/AML examinations on 85 out of 132 of commercial banks. Similarly, during January through April 2007, KYC/AML examinations on 964 out of 1822 of rural banks were conducted.BI conducted 2040 examinations during the period This resulted in monetary penalties in five cases and the issuing of 2512 supervisory letters to Rural Banks and 291 letters to Commercial Banks.
13KYC Capacity Enhancement Consist of internal & external training.Internal training since 2005 – present.ProgramParticipantsLocationDateWorkshop for BI’s staffsSupervisor & ExaminersJakartaSeptember & December 20053 days Workshop KYC/AMLSupervisor/Core Team KYC (in coordination with World Bank & FSVC)August 20071 day training for KYC/AML240 bank supervisorsAnnually4 days Workshop on AML/CFTMember of Core Team and FKKAugust 2008
14COORDINATION AND COMMUNICATION BI has established :AML/CFT Core Team since 2005 consisting of 114 members, representing nine directorates in head office and 34 branch offices. The aim of establishing the KYC/AML Core Team is to provide the same perception and perspective to all KYC/AML supervisors in conducting examinations.Communication Forum on AML/CFT (FKK) since Feb consisting of AML/CFT Core Team from Bank Indonesia and AML/CFT officers from all Commercial Banks (milist, workshop, and meeting)
15PUBLIC CAMPAIGNAdvertising through public media (TV, radio, talk show, paper) ->Socialization to senior public officer cooperating with KPK and PPATK using multimedia presentation (2008 – 2011)Leaflet, poster, comic, and souvenirs (pin, book mark, book note, mug, sticker, etc) since 2005
16RATING PARTIAL COMPLIANT MER RatingRATING PARTIAL COMPLIANTNumberContent5Undertake Customer Due Dilligence (CDD)11Monitoring of Transaction13Report Suspicion to FIU15Financial institutions to have AML programs17Penalties for not complying with obligations21Beware others no applying FATF25establish guidelinses and give feedback29Ensure compliance30Provide adequate AML/CFT resources32Maintain statistic
17MER Rating RATING NON COMPLIANT Number Content VII Information to accompany wire transferIVReport terror-related suspicious transaction6Extra diligence for Political Exposed Person (PEPs)7Extra diligence : Corresponden banking9FI may use intermediaries for CDD work22Apply AML to foreign affiliates
18Next AgendaAmandement Bank Indonesia Regulation regarding KYC in line with 40+9 FATF Recommendations, which will be enacted on May 2009.Report the progress of APG Mutual Evaluation on Bank Indonesia in July 2009, Brisbane Australia