Bank Indonesia recently issued Regulation of Bank Indonesia No.13/15/PBI/2011 on Monitoring Foreign Exchange Flow Activities in Non-Bank Institutions (“PBI 13”) which will replace and repeal the following regulations by January 2012:
- Bank Indonesia Regulation No. 1/9/PBI/1999 on Monitoring Foreign Exchange Flows in Bank and Non Bank Financial Institutions (“Regulation 1/1999”);
- Bank Indonesia Regulation No. 4/2/PBI/2002 on Monitoring Foreign Exchange Flows in Non Financial Institutions Companies (“Regulation 4/2002”); and
- Bank Indonesia Regulation No. 5/1/PBI/2003 on Amendments to Bank Indonesia Regulation No. 4/2/PBI/2002 (“Regulation 5/2003”).
PBI 13 defines the key terms used throughout the regulation, including ‘Foreign Exchange Flow Activities’, which are defined as activities that result in exchanges of assets and financial obligations between residents and non-residents, or exchanges of foreign assets and foreign financial obligations between residents. A resident is defined as any person, legal body or other entity domiciled or planning to be domiciled in Indonesia for at least one year, including representatives and diplomatic staff of the Republic of Indonesia in foreign states.
PBI 13 requires non-bank institutions engaged in foreign exchange flow activities to submit a Foreign Exchange Flow Report (LLD Report) to Bank Indonesia. The types of non-bank institutions that are required to submit LLD Reports broadly include state-owned companies (BUMN), region-owned companies with foreign debt, non-bank financial institutions, public companies, oil and gas companies, goods exporting and importing companies, services companies, foreign investment companies, privately-owned companies with foreign debt, other entities with foreign debt, and other non-bank institutions with total assets or turnover as regulated in a forthcoming Bank Indonesia Circular Letter.
Under PBI 13, the LLD Report should cover, amongst other things commercial activities such as goods trading, providing services, and other transactions between Residents and Non-Residents; and/or positions in and changes to Foreign Financial Assets (AFLN) or Foreign Financial Obligations (KFLN).
With respect to non-bank institutions acting as financial agents, the LDD Report must cover foreign exchange flow activities carried out by the non-bank institutions for their own interests as well as for those of their customers. Non-bank institutions have the right to ask for information and data from customers engaging in foreign exchange flow activities through the non-bank financial institutions.
PBI 13 also requires non-bank institutions to submit monthly LLD Reports online by the 10th day of the following month. Non-bank financial institutions will only be exempt from this obligation in the event of force majeure. Bank Indonesia has the right to ask for information, accounting evidence, notes and other documents related to the LDD Report.
Non-bank financial institutions that fail to submit a correct LLD Report will be subject to an IDR 50,000 fine for every incorrect record line in the report. The maximum fine is IDR 20 million. Any non-bank financial institution that fails to meet the submission deadline will be subject to a fine of IDR 1 million for every day of delay, up to IDR 10 million. Any non-bank financial institution that does not submit a LDD Report will be fined IDR 20 million.
Further details on PBI 13 will be provided in a forthcoming Bank Indonesia Circular Letter.
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