The head of the Indonesian Financial Transactions Report and Analysis Centre (PPATK) has issued a new regulation on the procedure for the submission of reports on suspicious financial transactions. The regulation, which came into force on December 21 2010, replaces the former regulations on the same subject matter (Decrees 2/6/KEP.PPATK/2003 and 217/KEP.PPATK/2003).
The preamble to the regulation cites three purposes for its issue:
- the prevention and eventual abolition of money laundering;
- the improvement of the reporting system in order to improve the effectiveness of the reports submitted by financial providers; and
- the provision of implementation regulations for Article 25(5) of the Law on the Prevention and Abolition of Money Laundering (8/2010).
The new PPATK regulation imposes on financial services providers an obligation to report suspicious financial transactions. Article 1 defines a 'financial transactions' as a transaction which:
- deviates from the profile, characteristics or habitual pattern of the service user concerned;
- is allegedly conducted for the purpose of avoiding reporting obligations;
- is executed or not executed by using funds that are the proceeds of a criminal act; or
- PPTAK suspects of involving funds that are the result of a criminal act.
A suspicious financial transaction report may be submitted either electronically or non-electronically – the procedures for each method are provided in Articles 4 and 5, respectively. All such reports must be submitted no later than three working days after their discovery, following which the reporting party must submit the supporting documents within three working days. PPATK has the right to ask for additional documents.
Financial services providers which fail to report suspicious financial transactions to PPATK face the penalties set down in Chapter VI of the regulation. The reporting obligation began to apply to commercial banks on January 21 2011 and will apply to rural banks, insurance companies/brokers, foreign exchange traders, investment managers, financial institutions, pension funds and other such institutions from March 31 2011. Sample formats for the reports are provided in the appendix to the regulation.
For further information on this topic please contact Hamud Balfas at Ali Budiardjo, Nugroho, Reksodiputro by telephone (+62 21 250 5125), fax (+62 21 250 5121) or email ([email protected]).
This update was also prepared by Maher Asmoro Putra Sasongko.