New PPATK Regulation on the Reporting of Suspicious Transactions by Financial Service Providers

Head of Indonesia Financial Transaction Reports and Analysis Center (PPATK) Regulation No. PER-07/1.02/PPATK/12/10 of 2010 on Procedures for the Submissions of Suspicious Financial Transaction Reports by Financial Service Providers (“Regulation”) has been issued to implement Article 25 (5) of Law No. 8 of 2010 on the Prevention and Eradication of Money Laundering, by specifying the form, type and procedure for financial transaction reporting.

According to its Preamble, the Regulation is intended to expand the reporting obligations of Financial Service Providers (FSP) to the PPATK, particularly of suspicious financial transactions (SFT), so as to contribute to the prevention and eradication of money laundering; and more generally, to improve the effectiveness of financial reporting.

Pursuant to Articles 1 (1), (4), (6), and 2, all FSP (those providing financial services or other services related with finance) are obligated to report SFT (financial transactions based on the transaction patterns of the service user, or those that allegedly originate from proceeds of crime, or transactions designed to evade reporting) to the PPATK. A FSP also has to submit a report in the event that it terminates a business relationship with a service user due to their refusal to comply with the Regulation or due to doubts over the truth of information provided by the service user. Further, under Article 1 (4) (d), PPATK can specifically request documents (data, records, or other information that can be seen, read, or heard) from the FSP, if there is a suspicion that a transaction involves proceeds of crime. The format of the report is set out in Appendix 1, with electronic reporting being required under Article 2 (3), unless one of the exceptions in Article 5 can be made out.

Pursuant to Article 6, the FSP must report on a SFT within 3 working days from the FSP becoming aware of any element of the SFT. Pursuant to Article 7, supporting documents mentioned in the initial SFT report must be submitted within 3 working days of the report submission; and any additional documents requested by PPATK must be submitted within 20 working days from the FSP receiving a (written) request.

Sanctions, as set out in Articles 12 (1) and (4), apply to FSP who fail to report on SFT. Such administrative sanctions can take the form of warnings, written warnings, public announcement of such actions and sanctions, and fines.

Electronic reporting obligations for commercial banks began on 31 January 2011; while for other FSP such as rural banks, insurance companies/brokers, and investment managers, the obligations will begin on 31 March 2011.

The Regulation revokes and replaces Head of PPATK Decrees No.2/6/KEP.PPATK/2003 and No. 217/KEP.PPATK/2003.

The Regulation has been in force since 21 December 2010.