Know Your Customers - Non-Bank Financial Institutions

The Minister of Finance has issued a regulation to ensure that all financial institutions, both bank and non-bank, are applying standardized 'know your customer' principles. The non-bank financial institutions noted in the Regulation are insurance, pension, and payment institutions and companies. This Regulation, No. 74/PMK.012/2006 is also a perfection of an earlier regulation, No.45/KMK.06/2003.

The 'know your customer' principles are mandatory with respect of application and will require non-bank financial institutions (LKNB / Lembaga Keuangan Non-Bank) to determine and confirm policies relating to the acceptance of customers, procedures for the identification of customers, procedures for the monitoring of customer accounts and transactions, procedures relating to risk management in the application of these principles. Each of these policies are further enumerated in the Regulation so as to explicitly stipulate how LKNB are to fulfill their obligations in this regard.