Implementing Regulation for the Organization of e-Money Amended

Bank Indonesia (“BI”) has issued Circular Letter No. 18/21/DKSP Year 2016 (“Amendment”), which amends BI Circular Letter No. 16/11/DKSP Year 2014 on the Organization of Electronic Money (“Circular Letter 16/11/2014”).[1]
 
In essence, the Amendment aims to increase the usage of electronic money (“e-Money”) and cashless transactions by revising provisions which encompass the following areas:
 

1.	Maximum e-Money values;
2.	Trials undertaken by prospective and/or existing e-Money issuers;
3.	Cooperation for the organization of e-Money;
4.	Monitoring and reporting obligations, specifically the monitoring of digital financial-service (layanan keuangan digital – “LKD”) agents and incidental reporting;
5.	The development of e-Money systems; and
6.	The designated office for the submission of reports.

 
Due to the broad scope of the Amendment, this edition of Indonesian Legal Brief will confine its discussion to points (1) to (4) only.
 
The Amendment is of relevance to existing or prospective principals, issuers, acquirers, and clearance and/or final settlement organizers of e-Money (collectively referred to as “Organizers”).[2]
 
Maximum e-Money Values
 
BI has now increased the maximum value of registered e-Money from IDR 5 million to IDR 10 million,[3] while the maximum value of unregistered e-Money remains at IDR 1 million.[4] However, the maximum threshold for any transactions involving either registered or unregistered e-Money remains the same, specifically IDR 20 million per month.[5]
 
Trials Undertaken by Prospective and/or Existing e-Money Issuers
 
BI has incorporated a new section into the Amendment which specifically regulates a trial mechanism for any banks or non-banks which are intending to become or which are in the middle of an application process to become issuers of e-Money (“Issuers”). Such trials can be undertaken in order to test a prospective Issuers’ readiness to offer e-Money, on condition that:[6]
 

1.	Any such trials are only performed within the prospective Issuers’ internal domain and only involve certain users and locations;
2.	The prospective Issuers first submit a proposal to BI no later than 30 days before the commencement of any trial; and
3.	The prospective Issuers then submit trial-result reports to BI no later than 10 days after the end of any trial.

 
In addition, the Amendment also allows any existing or prospective Issuers intending to provide LKD to also undertake trials, provided that any such trials are in compliance with BI Circular Letter No. 18/22/DKSP of 2016 on the Organization of LKD (“Circular Letter 18/22/2016”).[7] This provision was not previously regulated through Circular Letter 16/11/2014.
 
Cooperation for the Organization of e-Money
 
In essence, Circular Letter 16/11/2014 allows for cooperation between any Organizers which have secured BI licenses or between Organizers and other parties.[8] If an Organizer cooperates with official LKD agents (i.e. fund-transfer organizer, Indonesian legal entities and/or individuals) as regards the provision of LKDs, then the Amendment now requires that any such cooperation be in compliance with Circular Letter 18/22/2016.[9]
 
In order to engage in any of the types of cooperation outlined above, an Organizer should first submit a proposal to BI no later than 45 working days before the signing of any cooperation agreement, along with the relevant supporting documents (e.g. draft cooperation agreement and risk-management analysis).[10]
 
After approval has been secured, the cooperating parties may sign an agreement which includes the requirement for the Organizer in question to submit a realization report (along with a copy of the agreement) to BI within 10 working days of the agreement being signed. The realization report must outline the implementation date as well as any important additional information.[11]
 
Additionally, the Amendment regulates that BI may also facilitate any such cooperation, provided that it supports national policy.[12]
 
Previously, Circular Letter 16/11/2014 only required that:[13]
 

1.	A cooperation may only take place after the relevant parties have first secured a BI stipulation;
2.	Any such cooperation must be conducted through a written agreement drawn up in the Indonesian language;
3.	The Organizer must submit a report on the cooperation within 10 days of the cooperation agreement being signed.

 
 
However, Circular Letter 16/11/2014 exempt Issuers and/or e-Money acquirers with merchants from the requirements which are set out in points (1) and (2), provided that any such cooperation is still be reported to BI on a monthly basis .[14] 
 
Monitoring of LKD Agents and Incidental Reporting
 
Since the issuance of Circular Letter 18/22/2016, the provisions which were set out in Circular Letter 16/11/2014 and which relate to LKD now fall under the former. This includes the topic of the monitoring of LKD agents through an on-site visit mechanism, which must now comply with Circular Letter 18/22/2016 as well.[15]
 
In terms of the reporting obligation, Circular Letter 16/11/2014 basically set out two types of required report which must be submitted by Organizers during the carrying out of their activities, namely: periodic and incidental reports.[16] However, BI has now only sets two types of incidental report, which are explained in the table below:[17]
 

Type of Report	Conditions
Incidental Reports	Organizers should report any systems failures and the relevant countermeasures to BI in case any of the following conditions pertains: a. Network failure when processing e-Money transactions; b. Data and disaster-management related failures; and/or c. Information fraud. Any such report must outline the relevant chronology and damage inflicted.
Data-Revision Reports	This type of report should be submitted to BI alongside relevant supporting documents if any changes are made to the Organizers, including: a. Changes made to: an office’s name and/or address; the composition of a Board of Directors and/or Board of Commissioners; business documents; etc. b. Mergers, consolidations, splits or acquisitions occur.

 
Previously, Circular Letter 16/11/2014 also included three types of cooperation reports (i.e. cooperation amongst Organizers, cooperation between Organizers and other parties, and cooperation between Issuers and LKD agents)[18]
 
The Amendment has been in force since 27 September 2016._RP