MINISTER OF FINANCE NUMBER 74/PMK.012/2006 CONCERNING IMPLEMENTATION OF KNOW-YOUR CUSTOMER PRINCIPLES FOR NON-BANK FINANCIAL INSTITUTIONS THE MINISTER OF FINANCE, Considering: a. that in the framework of effectiveness of implementing Know-Your Customer Principles within the Insurance, Pension Fund and Financing Industry, improvement to the Decree of the Minister of Finance Number 45/KMK. 0/2003 concerning Know-Your Customer Principles for Non-Bank Financial Institutions; b. that based on the foregoing consideration in point a hereof, it is deemed necessary to stipulate a Decree of the Minister of Finance concerning Implementation of Know -Your Customer Principles; In view of: 1. Law Number 2 year 1992 concerning Insurance Business (State Gazette Number 13 year 1992, Supplement Number 3467); 2. Law Number 11 year 1992 concerning Pension Fund (State Gazette Number 37 year 1992, Supplement Number 3477); 3. Law Number 15 year 2002 concerning Money Laundering Crime (State Gazette Number 30 year 2002, Supplement Number 4191) as amended by Law Number 25 year 2003; 4. Presidential Decree Number 61 year 1988 concerning Financing Institutions (State Gazette Number 53 year 1988); 5. Presidential Decree Number 20/P year 2005 HAS DECIDED: To enact: REGULATION OF THE MINISTER OF FINANCE CONCERNING IMPLEMENTATION OF KNOW YOUR CUSTOMER PRINCIPLES FOR NON-BANK FINANCIAL INSTITUTIONS CHAPTER I GENERAL PROVISIONS Article 1 In this Decree of the Minister of Finance, the following terms shall have meanings as follows: 1. An Insurance Company is a General Insurance Company, Life Insurance Company and an Insurance Brokerage Company referred to in the Law on Insurance Business. 2. Pension Fund is Pension Fund of Non-Bank Financial Institutions referred to in the Law on Pension Fund. 3. Financing Institution is a Financing Company and Capital Venture Company referred to in the Presidential Decree concerning Financing Institution. 1/7
4. Non-Bank Financial Institution (NBFI) is an Insurance Company, Pension Fund and Financing Institution. 5. Know -Your Customer Principles are principles implemented by Non-Bank Financial Institutions to identify a Customer's identity and background and to monitor the Customer's transaction activities. 6. Customer is a party that uses NBFI's services, including but not limited to: a. Policyholder and or the insured party of a General and Life Insurance Company. b. Client of an Insurance Broker c. Participant or a party entitled to pension benefits of a Pension Fund d. Employer paying contribution on behalf of participants of a Pension Fund e.. Client or Trade Debt Vendor in Factoring Services e. Consumer of Consumer's Financing activities f. Lessee or Tenant of Business Venture in leasing activities or Business Venture Lease g. Holder of credit card in credit card business; and h. Partnership Company in a Venture Capital activity 7. Account is a detailed and complete record concerning a Customer, including but not limited to identity, transaction or bond between NBFI and Customer. 8. Bond is an agreement between NBFI and customer in accordance with the line of business of the NBFI, including but not limited to: a. policy of a General and Life Insurance Company b. agreement between a client and an Insurance Brokerage Company c. regulation on pension fund, evidence of participation, agreement between employer and Pension Fund and employer's statement that its employees will be participating in the Pension Fund Scheme d. business lease agreement e. consumer's financing agreement f. factoring agreement g. opening of credit card account; and h. Bond between a Venture Capital Company and Partnership Company CHAPTER II KNOW-YOUR CUSTOMER PRINCIPLES Part One Obligation to Implement Know-Your Customer Principles Article 2 NBFI shall implement Know-Your Customer Principles Article 3 In implementing Know-Your Customer Principles referred to in Article 2 hereof, NBFI shall: a. set the policy of accepting Customers b. set the policy and procedure of identifying Customers c. set the policy and procedure of monitoring Customers' account and transactions d. set the policy and procedure of risk management relating to implementation of Know- Your Customer Principles 2/7
Part Two Implementation of Know-Your Customer Principles Article 4 1. Implementation of Know-Your Customer Principles referred to in Article 2 hereof shall be carried out as follows: a. Set up and determine the policy and procedure of Know-Your Customer Principles described in the Guidelines to Implementation of Know-Your Customer Principles; b. Submit Guidelines to Implementation of Know-Your Customer Principles to the Minister of Finance; c. Submit any changes to the Guidelines to Implementation of Know -Your Customer Principles to the Minister of Finance not later than 7 (seven) working days after such changes take effect; and d. Apply the policy on knowing the Customer based on the Guidelines to Implementation of Know-Your Customer Principles referred to in point a hereof 2. The provision on Guidelines to Implementation of Know-Your Customer Principles referred to in paragraph (1) letter a is stipulated further in the Regulation of the Chairman, Capital Market Supervisory Board and Financial Institutions. Article 5 The party that requests an operating permit for the Insurance Company and Financing Institution or ratification of Regulation for Pension Fund, shall also submit Guidelines to Implementation of Know -Your Customer Principles referred to in Article 4 paragraph (1) hereof together with the application letter. Part Three Policy on Accepting and Identifying Customer Article 6 1. Before establishing Bond with a Customer, NBFI shall obtain the following information regar ding: a. identity of the prospective Customer b. purpose and intention to make transactions or to establish Bond with NBFI c. financial profile of the prospective Customer d. Bond that is already established with the NBFI concerned, and e. identity of the other party, in the event the prospective Customer acts for and on behalf of the other party, referred to in Article 7 hereof. 2. Identity of the prospective Customer referred to in paragraph (1) shall be proved by virtue of the following documents: a. For individual customer, at least consists of: (1) customer's identity, containing: a) name b) permanent address c) place and date of birth d) nationality (2) statement on occupation (3) specimen of signature 3/7
(4) statement on source of funds, in the event NBFI is an Insurance Company and Pension Fund, and purpose of such fund, in the event NBFI is a Financing Institution b. For corporate customer, at least consists of (1) Corporate documents: a) Deed of establishment or articles of association in the form as prescribed in the prevailing regulations b) Operating license or other permits from the relevant authority c) Taxpayer Identification Code Number (NPWP) for Customer that is required to have NPWP as referred to in the prevailing regulations (2) Names, specimens of signature and proxy of parties authorized to act for and on behalf of the company to establish business relationship with NBFI. (3) Documents of identity of the parties authorized to act for and on behalf of the company; and (4) Statement on source of funds, in the event NBFI is an Insurance Company and Pension Fund, and purpose of such fund, in the event NBFI is a Financing Institution 3. NBFI shall examine validity and accuracy of the documents supporting the identity of the prospective Customer referred to in paragraph (2) hereof. 4. If necessary, NBFI may interview the prospective Customer to examine and ascertain validity and accuracy of the documents referred to in paragraph (3) hereof. Article 7 (1) In the event the prospective Customer acts as intermediary or proxy of a beneficial owner to execute a Bond, NBFI shall obtain the supporting documents referred to in Article 6 paragraph (2) hereof concerning a prospective Customer as well as legal relationship, duties and power to act as intermediary or proxy of another party. (2) NBFI shall obtain proof of identity of the beneficial owner, source of funds, purpose of such fund and other information concerning the beneficial owner and prospective Customer, interalia: a. for individual beneficial owner: 1) supporting documents referred to in Article 6 paragraph (2) point a; and 2) statement from the prospective Customer that examination has been conducted and accuracy confirmed of the Customer's identity as well as the source of funds of the beneficial owner; b. for corporate beneficial owner, including NBFI: 1) supporting documents referred to in Article 6 paragraph (2) point b; and 2) statement from the prospective Customer that examination has been conducted and accuracy confirmed of the Customer's identity as well as the source of funds of the beneficial owner Article 8 NBFI shall not establish Bond with a prospective Customer that does not meet the provision stipulated in Article 6 and or Article 7 hereof. 4/7
Part Four Monitoring Customer's Account and Transactions Article 9 NBFI shall update data in the event of changes to the documents referred to in Article 6 and Article 7 hereof. Article 10 (1) NBFI shall maintain data of transactions made between NBFI and Customer to monitor the customer's account and transactions. (2) NBFI shall make records and keep data of transactions made between NBFI and Customer referred to in Article 6, Article 7 and Article 9 hereof for the period of at least 5 (five) years after the Customer terminates the Bond with NBFI. Article 11 NBFI shall meet the reporting provision to the Financial Transaction Analysis and Reporting Center (PPATK) in accordance with the law relating to money laundering crime and its implementation rules. Part Five Risk Management Article 12 The policy and procedure of risk management referred to in Article 3 point d shall at least cover the following matters: a. supervision by the Board of Directors and Commissioners or management oversight of NBFI; b. delegation of authority c. segregation of duties d. internal supervision system, including internal audit; and e. training program on implementation of Know-Your Customer Principles to officers, employees and marketing staff who are not employees of NBFI CHAPTER III RESPONSIBLE PERSON AND SUPPORTING FACILITIES Article 13 The Board of Directors or Management of NBFI shall be responsible for implementation of Know- Your Customer Principles. Article 14 NBFI shall set up a special task force or designate a special officer responsible for implementation of Know-Your Customer Principles. 5/7
Article 15 (1) NBFI shall maintain an adequate information system to identify, analyze, monitor and provide information effectively regarding the characteristics of transactions made by the Customers. (2) Such information system referred to in paragraph (1) hereof shall enable NBFI to trace every transaction, if necessary, including tracing back of the Customer's identity, form of transaction, date of transaction, amount and denomination of transaction, source of fund used for such transaction and other Bond kept by the Customer with the NBFI concerned. Article 16 NBFI shall car ry out a training program on implementation of Know-Your Customer Principles referred to in Article 12 point e hereof as follows: a. setting up a training program b. submit such training program to the Minister of Finance c. carry out the program according to the schedule d. report execution of the training program to the Minister of Finance CHAPTER IV COMPLIANCE AUDIT Article 17 (1) Chief of Insurance Bureau, Chief of Pension Fund Bureau and Chief of Banking, Financing and Securities, Department of Finance conduct compliance audit on NBFI in meeting their obligations relating to implementation of Know-Your Customer Principles stipulated in this Regulation of the Minister of Finance. (2) The provision concerning execution of the compliance audit referred to in paragraph (1) above shall be stipulated further by virtue of a decision of Chairman of the Capital Market Supervisory Board and Financial Institutions. CHAPTER V SANCTION Article 18 (1) Violation of the provisions stipulated in Article 2, Article 3, Article 4, Article 6 paragraph (1), paragraph (2) and paragraph (3), Article 7, Article 8, Article 9, Article 10, Article 11, Article 12, Article 14, Article 15 and Article 16 hereof shall be subject to sanctions in the form of: a. warning; or b. other sanctions pursuant to the prevailing regulations (2) The procedure and term of the administrative sanction in the form of warning referred to in paragraph (1) point a hereof shall be stipulated further by virtue of a decision of Chairman of the Capital Market Supervisory Board and Financ ial Institutions 6/7
CHAPTER VI TRANSITIONAL PROVISIONS Article 19 (1) All sanctions imposed by Decree of the Minister of Finance Number 45/KMK.06/2003 concerning Implementation of Know -Your Customer Principles for Non -Bank Financial Institutions shall remain valid and in force. (2) NBFI that has not overcome the reasons for such sanctions stipulated in paragraph (1) hereof shall be subject to further sanction pursuant to the prevailing regulations. Article 20 Decision of the Director General of Financial Institutions Number 2833/LK/2003 concerning Guidelines to Implementation of Know-Your Customer Principles for Non-Bank Financial Institutions, which is based on Regulation of the Minister of Finance Number 58/PMK.012/2006, which is read as Decision of Chairman of the Capital Market Supervisory Board and Financial Institutions, shall remain in force for as long as it is not in contravention of this Regulation of the Minister of Finance. CHAPTER VII CLOSING PROVISIONS Article 21 On the date this Regulation of the Minister of Finance takes effect, Decree of the Minister of Finance Number 45/KMK.06/2003 concerning Implementation of Know-Your Customer Principles for Non-Bank Financial Institutions shall be deemed invalid. Article 22 This Regulation of the Minister of Finance shall take effect on the date of its enactment. For public cognizance, this Regulation of the Minister of Finance shall be promulgated in the State Gazette of the Republic of Indonesia. Stipulated in Jakarta on August 31, 2006 Minister of Finance signed by SRI MULYANI INDRAWATI 7/7