ProdukHukum BankIndonesia

● _{Composit e Rat ing For Branch Off ices Of Foreign}

Rural Bank 1. Objectives

The provisions concerning bank rat ing are int ended f or use as:

● _{a benchmark f or bank management in assessing}

w het her t he bank is managed according t o sound b an k i n g p r i n ci p l es an d i n co m p l i an ce w i t h prevailing regulations.

● _{a benchmark f or det ermining t he course of bank}

supervision on bot h an individual basis and f or t he banking syst em as a w hole.

2. Rating System

In essence, rat ing of banks t akes place t hrough a qualit at ive assessment of t he various aspect s aff ect ing t he condit ion and grow t h of a bank, covering Capit al, Asset s Qualit y, M anagement , Earnings, and Liquidit y (CAM EL). Important aspects of the rating are described as f ollow s:

● _{The out come of t he rat ing is expressed as one of}

four levels: Sound, Fairly Sound, Poor, and Unsound.

● _{Th e w ei g h t i n g o f each CA M EL f act o r f o r}

Commercial Banks and Rural Banks is as f ollow s:

● _{Enf orcem ent of regulat ory provisions in w hich}

sanct ions are linked t o Com m ercial Bank rat ing apply t o violat ion and/or lending in excess of t he Legal Lending Limit violation of applying know your cust omer (KYC) principle, violat ion of t ransparency in b an k p ro d u ct in f o rm at io n an d u se o f t h e cust omer personal dat a

● _{Fact ors t hat w ould result in dow ngrading of bank}

rat in g t o u n so u n d in clu d e: in t ern al co n f lict s, i n t er f eren ce b y p ar t i es o u t si d e t h e b an k ’s management , w indow dressing, bank-w it hin-bank pract ices, suspension f rom clearing, and ot her b an k in g p ract ices t h at w o u ld jeo p ard ize t h e sust ainabilit y of bank operat ions.

E. Self-Regulatory Banking (SRB) Regulations

1. Guidelines for Formulation of Bank Credit Policy

Banks are required t o inst it ut e w rit t en credit policy guidelines elaborating at least the follow ing key points st ipulat ed in t he Guidelines f or Formulat ion of Bank Credit Policy:

a. Prudent ial principles in credit operat ions.

b. Organization and management of credit operations. c. Credit approval policy.

d. Credit document at ion and administ rat ion. e. Credit cont rol and set t lement of problem loans. Banks are required t o maint ain consist ent compliance w it h t he f ormulat ed Guidelines on Bank Credit Policy.

2. Internal Audit Unit at Commercial Banks

Commercial Banks are required to establish an Internal Audit Unit as part of t he applicat ion of St andard Pract ices f or t he Bank Int ernal Audit Funct ion. The Int ernal Audit Unit is a unit direct ly responsible t o t he president direct or. The Int ernal Audit Unit has t he f ollow ing t asks and responsibilit ies:

● _{A ssi st t h e p resi d en t d i r ect o r an d b o ard o f}

co m m i ssi o n er s i n t h ei r su p er vi so r y t ask s b y elaborat ing in operat ional t erms t he planning and im plem ent at ion of audit and t he m onit oring of audit f indings;

● _{Co n d u ct an alysis an d evalu at io n in f in an ce,}

accounting, operations, and other activities through on-sit e examinat ion and off -sit e supervision;

● _{Ident if y all possibilit ies f or improving eff iciency in}

● _{Pr o vi d e o b j ect i ve reco m m en d at i o n s f o r}

i m p r o vem en t an d i n f o r m at i o n o n act i vi t i es examined at all levels of management .

3. Compliance Director

Banks are required t o appoint a member of t he Board of Directors or of the head of management of Foreign Bank Branch Office as Compliance Director, responsible f or:

a. Est ablishing t he necessary measures f or ensuring t he compliance of t he Bank w it h all Bank Indonesia r eg u l at i o n s an d o t h er p revai l i n g l aw s an d regulat ions w it hin t he f ram ew ork of upholding prudent ial principles;

b. M onit oring and ensuring t hat bank operat ions do not deviat e f rom prevailing regulat ions;

c. M onit oring and ensuring t he compliance of t he bank w it h all agreement s and commit ment s made by t he bank w it h Bank Indonesia.

4. Business Plan and Annual Budget Commercial Bank

a. Ban k m u st f o rm u lat e a realist ic b u sin ess p lan addressing ext ernal f act ors aff ect ing t he cont inuit y of t he bank’s operat ion w it h consist ent regard t o prudent ial and healt hy banking principles. The business plan shall at least cover t he f ollow ing:

● _{Execut ive summary} ● _{Current perf ormance}

● _{Risk management implement at ion} ● _{M anagement policies and st rat egies} ● _{Financial project ion}

● _{Fund collection plan} ● _{Funds disbursement plan} ● _{Capit al plan}

● _{Project ed rat ios and cert ain it ems}

● _{Organization and human resources development}

plan

● _{New product and act ivit y development plan} ● _{Change in off ice net w ork plan}

● _{Ot her inf ormat ion}

b. The board of directors must implement the business plan eff ect ively and communicat e t o shareholders of t he bank and all organizat ional levels w it hin t he bank.

c. The board of com m issioners m ust oversee t he implement at ion of business plan.

d. Bank must submit a business plan to Bank Indonesia no lat er t han 1 (one) mont h af t er t he beginning of calendar year. Bank must submit a quart erly report on business plan realizat ion and six-mont ly report on oversght of business plan.

Rural bank

a. Rural Bank must f ormulat e a realist ic business plan and annual budget , st at ing at least t he f ollow ing:

● _{Plan f or f unding}

● _{Plan f or f und channelling, consist of w orking}

cap i t al cred i t , i n vest m en t cred i t , an d consumption credit

● _{Balance sheet and income statement projections}

in 2 (t w o) semest ers

● _{Human resources development plan; and} ● _{Act ion f or improving bank perf ormance, consist}

of resolut ion of non perf orming loan, plan f or recover of f inancial loss, and ot hers.

b. Business plan should be arranged by t he board of direct or or t he execut ive off icer in equal level and should be approved by t he board of commissioners c. The board of direct ors is required t o implement t he business plan and t he board of commissioners is required t o supervise it s implement at ion.

d. The business plan m ust be subm it t ed t o Bank Indonesia in t he end of January. The board of com m isioners m ust subm it six-m ont ly report of business plan realizat ion.

5. Information System Technology (IT)

Bank Indonesia has adopt ed t he f ollow ing provisions concerning IT:

a. Banks may operat e t heir ow n IT syst ems or use out sourcing;

b. If a bank operat es it ow n IT syst em , t he bank m an ag em en t sh al l b e r eq u i red t o ap p l y management cont rol and carry out t he IT int ernal au d it f u n ct io n in co m p lian ce w it h p revailin g regulat ions;

c. If t h e IT syst em is o u t so u rced , in ad d it io n t o complying w it h t he provisions set f ort h in it em (ii) above, t he bank shall also evaluat e t he reliabilit y of t h e IT service p ro vid er an d p rep are a w rit t en agreement stating that Bank Indonesia may conduct examinat ion and deliver a copy of t hat agreement t o Bank Indonesia;

d. Banks are required t o inf orm Bank Indonesia of any f undament al changes in t he use of IT.

6. Application of Risk M anagement for Commercial Banks

In line w it h t he rapid grow ing in t he ext ernal and int ernal environment of t he banking syst em and t he increasing complexity of business operation, banks are required t o apply risk management in an eff ect ive manner.

Applicat ion of Risk M anagement shall encompass at least t he f ollow ing :

● _{Act ive supervision by t he Board of Commissioners}

and Board of Direct ors;

● _{Adequacy of policy, procedure, and est ablishment}

of limit s;

● _{A d eq u acy o f p ro cesses o f i d en t i f i cat i o n ,}

measurement , monit oring and cont rol of risk and t he risk management inf ormat ion syst em; and

● _{Comprehensive int ernal cont rol syst em.}

For t he purpose of implement ing eff ect ive processes and syst em of risk management , banks are required t o est ablish :

a. A Risk M anagement Commit t ee t hat consist of at least t he majorit y of t he Board of Direct ors and relevant execut ive off icers.

b. A Risk M anagement Unit that must be independent and shall be responsible direct ly t o t he M anaging Direct or or t o a specially assigned Direct or. Banks are also required t o disclose t o t heir cust omers t he risk inherent in new product s and act ivit ies.

7. Applicat ion of Risk M anagement in Int ernet Banking

Banks providing internet banking services are required t o ensure eff ect ive applicat ion of risk management in their internet banking activities, covering the follow ing: a. Active oversight by the Board of Commissioners and

Board of Direct ors b. Securit y cont rol syst em

c. Risk management w ith particular focus on legal risk and reput at ion risk.

Applicat ion of risk management shall be set out in a w rit t en policy, procedures, and guidelines f ormulat ed w ith reference to the Guidelines for Application of Risk M anagement in Banking Services over t he Int ernet issued by BI.

To im p ro ve ef f ect iven ess in ap p licat io n o f r isk management , banks are required t o conduct a regular evaluat ion and audit of int ernet banking act ivit ies.

8. Im p le m e n t a t io n o f Risk M a n a g e m e n t f o r Bancassurance

a. While doing bancassurance act ivit ies, Bank is not permit t ed t o undert ake, eit her alone or joint ly, t he risk arising f rom insurance act ivit ies.

b. Bank im plem ent ing bancassurance act ivit ies is obligat ed t o im plem ent risk m anagem ent shall cover but not limit ed t o t he f ollow ing:

● _{Appoint ment of insurance company t o become}

bank’s part ner;

● _{Im p l em en t at i o n o f r u l es r eg ard i n g b an k}

conf ident ialit y; and

c. Ban k s is o b lig at ed t o m ak e a select io n o ver insurance companies w hich w ill become t he bank’s part ner in bancassurance act ivit ies w it h at t ent ion paid t o t he f ollow ing mat t ers:

● _{Insurance company eligible t o become a part ner}

is one t hat complies w it h t he minimum level of solvabilit y according t o prevailing rules.

● _{Th e in su r an ce co m p an y h as o b t ain ed t h e}

relevant license f rom t he M inist er of Finance t o ru n b an cassu ran ce act ivit ies acco rd in g t h e prevailing rules

● _{Ban k s o b lig at ed t o m o n it o r, an alyze, an d}

evaluat e perf orm ance and or reput at ion of part ner insurance company periodically at least once a year.

d. Bank is obligat ed t o end t he part nership bef ore t he end of agreement period or may not ext end t he period of part nership if :

● _{Perf ormance of part ner insurance company no}

meet condit ions

● _{There has been a decrease in reput at ion of}

part ner insurance com pany w it h signif icant inf luence on banks’s risk prof ile.

e. In t he event t hat t he market ed insurance is linked t o in vest m en t (in vest m en t lin k /u n it lin k ), Th e insurance company has complied w it h condit ions st ipulat ed bay The M inist er of Finance, w hich, among others, are as follow s:

● _{Availabilit y of an expert w hose qualif icat ions}

equal t o a deput y invest ment manager w it h at least 3 year experience

● _{Separat ion of asset s and obligat ion f rom ot her}

lif e insurance

● _{Im plem ent at ion of ot her m at t ers required in}

managing t he invest ment f unds ent rust ed by cu st o m er s o p t i m al l y, p r o f essi o n al l y, an d independent ly.

9. Applicat ion of Risk M anagement f or Banks Conducting Activities Related to M utual Funds

In response t o t he st eadily expanding involvement of Banks in act ivit ies relat ed t o mut ual f unds, t here is grow ing aw areness t hat t hese act ivit ies not only yield benefits but also incur various potential risks for Banks. In this regard, Banks need to strengthen the effective ap p l i cat i o n o f r i sk m an ag em en t t h ro u g h t h e implementation of prudential principles and protection of cust om er int erest . The scope of Bank act ivit ies relat ed t o mut ual f unds covers act ivit ies of Banks as invest ors, Banks as m ut ual f und sales agent s, and Banks as Cust odian Banks. The most import ant t ask t hat a Bank is required t o perf orm in support of eff ect ive applicat ion of risk management is t o:

● _{Ensure t hat any invest m ent m anager act ing as}

part ner in act ivit ies relat ed t o m ut ual f unds is reg ist ered an d licen sed b y t h e cap it al m arket au t h o r it y in acco rd an ce w it h t h e ap p licab le regulatory provisions;

● _{Ensure that the mutual fund concerned has received}

a statement of effective registration form the capital market aut horit y in accordance w it h t he applicable regulatory provisions;

● _{Ident if y, measure, monit or, and cont rol risks arising}

from act ivit ies relat ed t o mut ual f unds.

In t he implement at ion of prudent ial principles, Banks are prohibit ed f rom any act ion, w het her direct ly, t hat may cause a mut ual f und t o acquire charact erist ics resem bling t hose of Bank product s, f or exam ple, savings deposit s or t ime deposit s.

10. Risk M anagement Certification for M anagement and Officers of Commercial Banks

In t he applicat ion of Risk M anagement on an eff ect ive basis, t he Bank is required t o f ill t he posit ions on t he Bo ard o f Co m m issio n ers an d f o r t h e Ban k Risk M an ag er w i t h h u m an r eso u rces p o ssessi n g compet ence and expert ise in risk management . The requirement f or management and execut ive off icer of

Banks to hold Risk M anagement Certificates represent one aspect in assessment of t he compet ence f act or in f it and proper t est . Banks are required t o plan and implement a human resources development program in order t o build compet ence and expert ise in risk m an ag em en t . Five levels are st ip u lat ed f o r risk management cert if icat es, based on t he hierarchy and organizat ional st ruct ure of t he Banks as f ollow s: level 1 – level 5. Risk management cert if icat ion may only be organized and held by Prof essional Cert if icat ion Agency licensed by Nat ional Agency f or Prof essional Cert if icat ion (BNSP). A risk management cert if icat e issued by an int ernat ional agency or ot her agency out side Indonesia may be considered f or recognit ion equivalent t o risk management cert if icat e issued by a prof essional cert if icat ion agency, if t he agency issuing t h e cert if icat e is in t er n at io n ally reco g n ized an d accept ed; cert if icat es have been issued during t he last 4 years.

F. Other Regulations

1. Short Term Funding Facility (FPJP) for Commercial Banks

A bank experiencing a short t erm f unding diff icult y ren d erin g it u n ab le t o set t le liab ilit ies, w h et h er generat ed t hrough t he clearing syst em and/or due t o use of Int raday Liquidit y f acilit y at pre-cut t ime of BI-RTGS, may obtain an FPJP from Bank Indonesia. A Bank may use FPJP insof ar as it holds high qualit y, liquid collat eral w it h minimum value at t he amount of FPJP received. FPJP shall be guaranteed against high quality collateral ow ned by the bank consist of Bank Indonesia Cert if icat e (SBIs) and/or Government Securit ies (SUNs) w it h condit ions:

● _{Selling value of t he SBIs and/or SUNs at least equal}

as value of t he FPJP;

● _{SBIs w ith remaining maturity of not less than 3 w ork}

days

● _{SUNs w it h remaining mat urit y of not less t han 10}

The t erm of each FPJP is 1 (one) day and m ay be ext ended on a consecut ive basis subject t o an overall maximum FPJP t erm of 90 (ninet y) days.

2. Short Term Funding Facilit y f or Sharia Banks (FPJPS)

A Sharia Bank may submit an FPJPS application to Bank Indonesia through the BI-SSSS commencing from the cut off w arning t hrough 15 minut es af t er BI-SSSS pre-cut off .FPJPS shall be backed by high qualit y, liquid collat eral held by t he bank concerned, not cont rary t o sharia principales, and regist ered at Bank Indonesia. Collat eral shall consist of :

● _{SWBs w it h remaining mat urit y of not less t han 3}

w orking days at t he dat e of mat urit y of t he FPJPS; and/or

● _{Secu r it ies an d /o r o t h er claim s issu ed b y t h e}

government based on sharia principles.

3. Intraday Liquidity Facility For Commercial Banks (FLI)

The FLI is t he f unding f acilit y ext ended by Bank Indonesia t o Banks in t heir capacit y as members of t h e BI-RTGS syst em an d m em b ers o f t h e SKNBI, repayable on t he same day as t he day of use. A Bank may obt ain an int raday f acilit y, w het her in t he f orm of LFI-RTGS or FLI-Clearing, af t er signing an agreement f or use and collat eral securit y of FLI and submit t ing the required supporting documents to Bank Indonesia. A Bank may use an FLI subject to meeting the follow ing requirement s:

● _{Ho ld in g secu rit ies in t h e f o rm o f SBIs an d /o r}

Government Securit ies usable as collat eral

● _{Not under suspension as a member bank in t he}

BI-RTGS syst em and BI-Scrip less Securit ies Set t lement Syst em (BI-SSSS), and

● _{Not under sanct ion f rom obt aining t he Short Term}

4. The Intraday Liquidity Facility for Commercial Banks Based on Sharia Principles (FLIS)

The FLI is t he f unding f acilit y ext ended by Bank Indonesia t o Banks in t heir capacit y as members of t h e BI-RTGS syst em an d m em b ers o f t h e SKNBI, repayable on t he same day as t he day of use. A Bank may obt ain an int raday f acilit y, w het her in t he f orm of LFI-RTGS or FLI-Kliring, af t er signing an agreement f or use and collat eral securit y of FLI and submit t ing t he required supporting documents to Bank Indonesia. FLIS received by a Banks shall apply t he m udharabah principle.

A Bank may use FLIS subject t o meet ing t he f ollow ing requirement s:

● _{Holds SWBIs, securit ies, and/or claims issued by t he}

government based on sharia principles t hat may be used as collat eral;

● _{Is not under suspension as member Bank of t he}

BI-RTGS an d /o r m em b er o f t h e BI-SSSS, an d /o r t erminat ed as member of t he SKNBI, and

● _{Is not under imposit ion of sanct ions prevent ing it}

from obt aining t he FPJPS.

5. Bank Indonesia Rupiah Deposit Facility (FASBI)

FASBI is a facility provided by Bank Indonesia for banks t o place t heir f unds in Bank Indonesia. The t enor of FASBI shall be a maximum of 7 days beginning on t he settlement date until the maturity date. FASBi may not be t raded, pledged as collat eral, or redeemed prior t o mat urit y.

6. Bank Foreign Borrow ing

A Bank may t ake on bot h short t erm and long t erm f oreign borrow ings. Banks are required t o limit t he daily balance of short t erm f oreign borrow ings t o no more t han 30% of bank capit al. A Bank int ending t o proceed w it h market ent ry t o raise long t erm f oreign borrow ings is required t o obt ain prior approval f rom Bank Indonesia.

7. Taxation of Interest

Income in the form of interest on time deposits, savings deposits, and discounts on Bank Indonesia Certificates (SBIs) w het her held by individuals or legal ent it ies, is levied a f inal income t ax of 20% of t he gross amount . This t ax w ill not be w it hheld insof ar as t he amount of t he t ime deposit and savings deposit and SBI does not exceed Rp 7,500,000.

8. Foreign Exchange Flow s

Follow ing the promulgation of Act Number 24 of 1999 concerning Foreign Exchange Flow s and Exchange Rate Syst em, any person may f reely hold and use f oreign exchange. Not w it hst anding Bank Indonesia reserves t he right t o request inf ormat ion and dat a on f oreign exchange act ivit ies. The requirem ent f or report ing act ivit ies in f oreign exchange f low s applies t o:

● _Banks

● _{Non-Bank Financial Inst it ut ions}

● _{Non-Bank Financial Inst it ut ions w it h t ot al asset s or}

annual sales turnover of not less than Rp 100 billion and act ively operat ing in Foreign Exchange Flow s.

9. In t e rb a n k M o n e y M a rk e t Ba se d o n Sh a ria Principles (PUAS)

To improve eff iciency in t he management of f unds, a money market is operat ed f or f unds based on Sharia Principles. The Sharia Int erbank M oney M arket (PUAS) comprises short-term investments in Rupiahs betw een market players, based on t he mudharabah principle. In t his act ivit y, Sharia Commercial Banks may engage in f und placement s and/or f und management , w hile convent ional Commercial Banks may engage only in f und placement s.

10. Supervisory Act ions and Designat ion of Bank Status

a. Bank Indonesia may place a bank under Int ensive Supervision if one or more of t he f ollow ing crit eria are met :

● _{rat ing is poor or unsound;}

● _{t he bank has act ual and/or pot ent ial problems}

based on assessment of composit e risk;

● _{in excess of and/or violation of the Legal Lending}

Limit (LLL);

● _{violat ion of t he Net Open Posit ion (NOP);} ● _{t he rat io of rupiah st at ut ory reserves is equal t o}

or great er t han t he st ipulat ed rat io f or bank st at ut ory reserves, but despit e t his t he bank is experiencing f undament al liquidit y problems;

● _{t h e b an k h as f u n d am en t al p ro b lem s w it h}

prof it abilit y;

● _{t he bank has net problem loans > 5% of t ot al}

credit .

b. Bank Indonesia may place a bank under Special Surveillance if one or more of t he f ollow ing crit eria are met :

● _{t he Capit al Adequacy Rat io (CAR) of t he bank is}

<8% ;

● _{t he rat io of rupiah st at ut ory reserves is below}

t he prescribed rat io f or bank st at ut ory reserves and t he bank is assessed as having f undament al liquidit y problems.

If a Bank placed under special surveillance is report ed as having syst emic impact , Bank Indonesia w ill not if y t h e Dep o sit In su ran ce A g en cy an d req u est t h e Coordinat ing Commit t ee t o convene a meet ing t o discuss w het her t he Bank does or does not have syst emic impact .

If a Bank under special surveillance does not have syst emic impact and meet s t he f ollow ing crit eria:

● _{The t ime given t o perf orm t he act ions required by}

BI has not expired, but t he condit ion of t he Bank has det eriorat ed w it h t he Capit al Adequacy Rat io has f allen t o below 2% w it h lit t le prospect f or recovery t o 8% ; or t he Bank has a rat io of st at ut ory reserves in rupiahs at less t han 0% t hat cannot be resolved under the applicable regulatory provisions; or

● _{The t ime given t o perf orm t he act ions required by}

BI has expired, t he Capit al Adequacy Rat io is below 8% , and the condition of the Bank is not improving, Bank Indonesia w ill inf orm t he Deposit Insurance Agency and request a decision f rom t hat agency on w het her t o rescue or not rescue t he Bank. If t he Deposit Insurance Agency decides not to proceed w ith rescue of t he Bank, Bank Indonesia w ill revoke t he o p er at i n g l i cen se o f t h e Ban k af t er recei vi n g not if icat ion f rom t he Deposit Insurance Agency.

11. Follow Up Action to Rural Bank under Special Surveillance

In t he event t hat Bank Indonesia deems a rural bank t o b e in su ch co n d it io n as t o h ave d if f icu lt ies endangering it s cont inued operat ion, t he rural bank sh all b e p laced u n d er sp ecial su rveillan ce. Ban k In d o n esia m ay p lace a ru ral b an k u n d er Sp ecial Surveillance if one or more of t he f ollow ing crit eria are met :

● _{The Capit al Adequacy Rat io (CAR) is less t han 4% ;} ● _{Cash Rat io (CR) f or t he past 6 mont hs is less t han}

3%

The period specified for special surveillance is 6 month from t he dat e of not if icat ion let t er f orm BI and can not be extended. During the period specified for special surveillance, a rural bank can be exited from the special surveillance if meet t he f ollow ing crit eria:

● _{The Capit al Adequacy Rat io (CAR) at least 4% , and} ● _{Average Cash Rat io f or t he past six mont hs at least}

3% , and

● _{Has co m p let ed all p ro cess o f law in reco very}

according t o t he regulat ions.

Bank Indonesia may make announcement concerning ru ral b an k u n d er sp ecial su rveillan ce t o Dep o sit Insurance Agency (LPS) t hese f ollow ing met t ers:

● _{The rural bank that is put under special surveillance;} ● _{The rural bank at t he period of special surveillance}

and t he period has been exceeded but t he f inancial condit ion of bank is not improved;

● _{Th e ru ral b an k t h at w as exit ed f ro m sp ecial}

surveillance in case f inancial condit ion is improved so The Capit al Adequacy Rat io (CAR) at least 4% and average Cash Rat io f or t he past six mont hs at least 3%

Af t er get t he announcement f rom BI in let t er b and c, LPS w ill evaluat e t o t ake decision rescue or not . If LPS decide not t o rescue, BI shall est ablish a revocat ion of operat ing license w it h t he announcement f rom LPS and publish it t o t he sociat e.

12. Certifying Institution for Rural Bank

The objectives for establishing the certifying institutions are:

● _{To ensure t he qualit y of t he cert if ying syst em} ● _{To ensure t he im plem ent at ion of t he cert if ying}

syst em; and

● _{To im p ro ve t h e q u alit y o f p er f o r m an ce an d}

prof essionalism of BPR’s human resources. The requirements that must be fulfilled by the certifying inst it ut ions are:

● _{Having a vision and mission to improve and develop}

human resources in BPRs t o support t he creat ion of sound, healt hy and eff icient indust rial condit ion f or BPRs;

● _{Const it ut ing t he minimum bodies t hat consist of :}

Cert if ying Board, Nat ional Curriculum Commit t ee, and management .

● _{Having and conduct ing it s dut ies based on it s}

co m p et en ce an d co m m i t m en t t o m an ag e, det ermine, and organize t he cert if ying syst em.

13. Debtor Information System (SID)

The operat ion of t he Debt or Inf ormat ion Syst em is int ended t o assist report ing ent it ies in expedit ing t he process of provision of f unds, f acilit at e t he applicat ion of risk management , and assist banks in ident if icat ion of debt or qualit y f or purposes of legal compliance. Commercial bank, bank financial institution,

non-bank credit providers, and rural non-bank w ith are required t o b eco m e rep o rt in g en t it ies w it h in t h e d eb t o r inf ormat ion syst em. The scope of debt or inf ormat ion provided t o a report ing ent it y shall include but not be lim it ed t o t he ident it y of t he debt or, ow ner and management , f acilit ies f or provision of f unds received by debt or, collat eral, guarant or, and/or collect ibles.

14. Restrictions on Rupiah Transactions and Foreign Currency Loans By Banks

Banks are prohibited and/or restricted and/or exempted in regard t o conduct ing cert ain t ransact ions w it h f oreign part ies. The prohibit ed t ransact ions are as f ollow s:

● _{Provision of credit and overdrafts in Rupiahs/foreign}

currencies

● _{Placement s in rupiah}

● _{Purchase of rupiah-denominat ed securit ies issued}

by f oreign part ies

● _{Int eroff ice account s in rupiahs}

● _{In t er o f f ice acco u n t s in f o reig n cu rren cy f o r}

provision of credit out side Indonesia

● _{Equit y part icipat ion in rupiahs}

● _{Rupiah transfer to an account held by foreign parties}

and/or joint account held by a f oreign part y and non-f oreign part y at a domest ic banks

● _{Rupiah t ransf er t o an account held by a f oreign}

party and/or joint account held by foreign party and non-f oreign part y at an overseas bank.

Banks are prohibited from conducting rupiah transfers t o non f oreign part ies out side Indonesia.

The rest rict ed t ransact ions are as f ollow s:

● _{Foreign exchange selling derivat ive t ransact ions}

against rupiahs;

● _{Foreign exchange buying derivat ive t ransact ions}

against rupiah.

Exem p t io n s t o p ro h ib it io n s an d rest r ict io n s o n t ransact ions are as f ollow s:

● _{The prohibition on provision of credit shall not apply}

to: syndicated credit that meets some requirements; credit card; consumpt ion credit used in Indonesia; int raday rupiah and f oreign currency overdraf t ; overdrafts in rupiah and foreign currency due to imposit ion of administ rat ion charges; negot iat ion b y f o reig n p art ies o f claim s f ro m t h e ag en cy appoint ed by t he government f or management of banks asset s w it hin t he f ramew ork of Indonesian b an k r est r u ct u r i n g , f o r w h i ch p aym en t i s guarant eed by a prime bank.

● _{The prohibit ion on purchase of securit ies in rupiah}

shall not apply t o: purchase of securit ies relat ed t o merchandise export f rom Indonesia, merchandise im p o r t s in t o In d o n esia, an d d o m est ic t r ad e; purchase rupiah-denominat ed bank draf t s issued by overseas banks f or t he account of Indonesian overseas w orkers in w hich t he rupiah f unds are received by non f oreign part ies w it hin Indonesia.

● _{The prohibit ion on rupiah t ransf ers shall not apply}

if conduct ed: as part of an economic act ivit y in Indonesia; or bet w een account s held by t he same f oreign part y.

● _{The rest rict ions on f oreign exchange derivat ive}

t ransact ion against rupiahs shall not apply in t he case o f d erivat ive t ran sact io n s co n d u ct ed f o r h ed g in g p u r p o ses as p ar t o f : in vest m en t in Indonesia w it h a t im e f ram e of no less t han 3 mont hs; merchandise export s f rom Indonesia and merchandise import int o Indonesia by means of let t er of credit (L/C); and/or domest ic t rade means of domest ic let t er of credit (SKBDN)

15. National Clearing System

Clearing is t he exchange of paper inst rum ent s or elect ronic f inancial dat a among clearing members, w het her in f avor of members or in f avor of cust omers of members, w it h set t lement calculat ions complet ed at a specif ied t im e. The Bank Indonesia Nat ional

Clearing System (SKNBI) is the Bank Indonesia Clearing syst em t hat covers debit clearing and credit clearing w it h set t lem ent conduct ed on a nat ionw ide basis. Set t lement during debit clearing and credit clearing is conduct ed by t he Nat ional Clearing Operat or on t he basis of t he result s of net mult ilat eral calculat ion and t he novat ion principle and is f inal and irrevocable. Set t lement also t akes place on t he basis of same-day settlement. Debit notes issued by a Bank for processing in debit clearing in t he SKNBI are rest rict ed in amount t o no more t han Rp 10 million per debit not e. Credit t ransf ers processed in credit clearing are rest rict ed t o no more t han Rp 100 million per t ransact ion.

16. Real Time Gross Settlement (RTGS)

To su p p o r t t h e ach i evem en t o f an ef f i ci en t , expedit ious, secure, and reliable payment syst em f or upholding f inancial syst em st abilit y, Bank Indonesia h as im p lem en t ed t h e Ban k In d o n esia Real Tim e Set t lement syst em (BI-RTGS). BI-RTGS is a syst em f or electronic funds transfer among M embers in the rupiah currency w it h set t lement processed on an individual per t ransact ion basis.

17. Intercity Clearing

Any bank t hat is regist ered and approved by BI may conduct t he clearing of checks and bilyet giro issued by bank off ices t hat are not members in t he Clearing Area in w hich t he checks and bilyet giro are cleared. Th e b en ef it s o f In t ercit y Clearin g are im p ro ved eff iciency in t ime and cost s due t o:

● _{Funds becom e available f rom checks/bilyet giro}

according t o t he local clearing schedule w here t he not es are cleared (same day set t lement )

● _{Processing f ees charged by BI are t he same as f or}

ot her local clearing inst rument s

18. Bank Indonesia Certificates (SBIs)

SBIs are Rupiah-denominat ed securit ies issued by BI in recognit ion of short -t erm debt and comprise one

of t he inst rument s used in Open M arket Operat ions. The t erm of SBIs is at least 1 mont h and no more t han 12 months. SBIs are issued in scrip less form and traded using t he discount syst em. SBIs may be held by banks an d o t h er p ar t ies as st ip u lat ed b y BI, an d are negot iable. SBIs may be purchased on t he primary market and t raded on t he secondary market under repurchase agreement s (repo) or in out right purchase/ sale.

19. Bank Indonesia Wadi’ah Certificates (SW BIs)

To support t he management of f unds by Sharia Banks an d Sh ar ia Divisio n s an d BI’s m o n et ar y co n t ro l operat ions, BI provides a short -t erm f und placement f acilit y under t he w adi’ah principle. The documentary proof of w adi’ah fund placement at BI is referred to as SW BI. Term s of placem ent are 7, 14, and 28 calen d ar d ays, an d t h e m in im u m am o u n t o f a placement is Rp 500 million. Fund placement of f unds in excess of Rp 500 m illion m ay be m ade only in m ult iples of Rp 50 m illion. SW BIs are issued and administered in scrip less form and are non-negotiable.

20. Bank Secrecy

Ban k secr ecy co ver s ever yt h i n g p er t ai n i n g t o inf ormat ion on deposit ors and t heir deposit f unds. Inf ormat ion on cust omers ot her t han deposit ors does not come under t he scope of inf ormat ion t hat must be kept conf ident ial by banks. This provision also applies t o aff iliat ed part ies.

The bank secrecy provisions do not apply t o: a. M at t ers pert aining t o t axat ion

b. Set t lement of bank claims placed in t he hands of the State Receivables and Auction Agency (BUPLN)/ St at e Receivables Commit t ee (PUPN)

c. Judicial process in criminal proceedings

d. Judicial process in civil proceedings bet w een banks and customers

e. Exchange of int erbank inf ormat ion

f. Req u est , ap p ro val, o r p o w er-o f -at t o r n ey o f a deposit or draw n up in w rit ing

g. Request by legal heir of deceased deposit or h. For purposes of examinat ion pert aining t o money

laundering.

Implement at ion of t he provisions in let t ers a, b, and c, shall require prior w ritten order or approval for w aiving of bank secrecy f rom t he management of BI, w hile implement at ion of t he provisions in let t ers d, e, f , g, and h shall not require such order or approval.

21. Government Securities (SUN)

SUN consist s of Treasury Bills and Sovereign Bonds. Treasury Bills are issued w it h a m at urit y up t o 12 (t w elve) m ont hs, w it h int erest paym ent using t he discount s syst em. Sovereign Bonds are issued w it h a m at urit y of m ore t han 12 (t w elve) m ont hs, w it h variable rate, fixed rate, and/or interest payment using t he discount s syst em. Any person, company, business part nership, associat ion, or organized group m ay purchase SUN by take place the placement of bids w ith Bank Indonesia t hrough bidders consist ing of Banks, M oney M arket Brokerage Companies, and Securit ies Companies f ulf illed t he crit eria by M inist er of Finance.

22. Human Resources Development at Banks

Banks are required t o provide educat ion and t raining f unds t o develop prof essional hum an resources at bank. For Commercial Banks, educat ion and t raining f unds are st ipulat ed at no less t han 5% of human resources budget . For Rural Banks, t he f unds are st ipulat ed at no less t han 5% of act ual expense incurred for human resources throughout the previous year. In case of t he educat ion and t raining f unds have not f ully used by t he end of t he current year, t he f und shall be added int o t he f unds f or t he f ollow ing year. Educat ion and t raining may be implement ed by t he f ollow ing means:

● _{organized by t he bank it self ;}

● _{part icipat e in educat ion and t raining provided by}

● _{w ork t oget her t o organize educat ion w it h anot her}

bank; or

● _{assign human resources t o part icipat e in educat ion}

and t raining provided by a banking educat ional inst it ut ion.

The educat ion and t raining plan shall be approved by t he Board of Commissioners or supervisory board and shall be report ed t o Bank Indonesia in t he annual business plan.

23. Depositor Funds Guarantee

As st ipulat ed in Act No. 24 of 2004 dat ed Sept ember 22 concerning t he Deposit Insurance Agency, t o t ake eff ect 12 m ont hs af t er t he dat e of prom ulgat ion, deposit ors at banks and rural banks holding demand deposits, time deposits, certificates of deposits, savings deposits, and/or other equivalent form of deposit funds shall benef it f rom government prot ect ion ext ended t h ro u g h t h e Dep o si t In su r an ce A g en cy (LPS). Lim it at io n s o n d ep o sit valu e p ro t ect ed b y t h is guarant ee w ill be phased in as f ollow s:

a. For 6 mont hs af t er Act No. 24 of 2004 becomes eff ect ive, deposit s shall be guarant eed t o t heir f ull value;

b. For t he next 6 mont hs af t er t he period ref erred to in let t er a, d ep o sit s sh all b e g u aran t eed t o a maximum of Rp 5 billions;

c. For t he next 6 mont hs af t er t he period ref erred t o in let t er b , d ep o sit s sh all b e g u aran t eed t o a maximum of Rp 1 billion;

d. Af t er expirat ion of t he period ref erred t o in let t er c, t he maximum guarant eed value of deposit s f or each cust omer at any one bank shall be Rp 100 millions.

Af t er t he operat ing license of a bank is revoked, deposit ors have a maximum of 5 years t o f ile Deposit Insurance claims against t he LPS.

24. Special Treatment for Commercial Bank Credit follow ing the National Disaster in Aceh Province and Nias Regency, North Sumatra Province

In response t he nat ional disast er in Aceh Province and Nias Regency, Nort h Sumat ra Province, BI is providing special t reat ment t o credit ext ended by commercial banks. Classif icat ion of qualit y of credit or ot her provision of f unds ext ended by a bank t o any debt or w it h an overall ceiling of no more t han Rp 5 billions shall be based solely on prompt repayment of principal and int erest . In t he case of rest ruct ured debt , qualit y sh al l b e cl assi f i ed cu r r en t co m m en ci n g f ro m rest ruct uring t hrough end of January 2008, subject t o t he f ollow ing requirement s:

a. Disbursed t o a debt or w it h project locat ion or business locat ion in Aceh Province and/or Nias Regency, Nort h Sumat ra Province; and

b. Has or is deemed likely t o experience diff icult ies in repaym ent of loan principal and/or int erest by reason of the impact of the disaster in Aceh Province and/or Nias Regency, Nort h Sumat ra Province.

25. Special Treatment for Rural Banks Follow ing The Natural Disasters In Nanggroe Aceh Darussalan Province And Nias Regency, Nort h Sumat era Province

Credit qualit y f or rescued debt shall be classif ied cu rren t co m m en cin g f ro m act io n s t ak en rescu e through January 31, 2008. Debt rescue may take place by: rescheduling; recondit ioning; or rest ruct uring. The provisions shall apply only t o credit t hat sat isf ies t he f ollow ing requirement s:

● _{Credit already extended at the time of promulgation}

of regulation concerning special treatment for Rural Banks Follow ing The Nat ural Disast ers In Naggroe Aceh Darussalan Province And Nias Regency, Nort h Sumatera Province

● _{Credit disbursed t o debt or w it h project locat ions}

Darussalam Province and/or Nias Regency, Nort h Sumat ra Province; and

● _{Has or is deemed likely t o experience diff icult ies in}

repaym ent of loan principal and/or int erest or Financing margin or profit share by reason of impact o f t h e n at u ral d isast ers in t h e Nag g ro e A ceh Darussalam Province and Nias Regency, Nort h Sumatera Province.

26. Resolution of Customer Complaints

Banks are required t o have a unit and/or f unct ion established specially in each Bank Office to handle and resolve complaint s brought by cust omers. To resolve com plaint s, Bank shall est ablish a policy and have w rit t en procedures covering t he f ollow ing:

a. receipt of Complaint ;

b. handling and resolut ion of Complaint s; and c. monit oring of Complaint handling and resolut ion A Bank shall resolve a Complaint no lat er t han 20 (t w ent y) w orking days af t er t he dat e of receipt of w rit t en Complaint . This Bank Indonesia Regulat ion shall be eff ect ive in July 2005.

G. Reporting by Commercial Banks

1. Regular Report s a. Daily Period

● _{Report on PUAB transactions, PUAS transactions,}

securit ies t ransact ions in secondary market , and f oreign exchange t ransact ions.

● _{Report on Net Open Posit ion} ● _{Cash Flow Projection} ● _{Part of balance sheet report}

● _{In t er est r at e an d m ar g i n o f m u d h ar ab ah}

invest ment t ime deposit report b. Weekly Period

● _{Report on Derivat ive Transact ions} ● _{Third Party Funds Report}

● _{Weekly Balance Sheet Report}

● _{M ont hly Report}

● _{M o n t h ly Pu b lish ed St at em en t o n t h e Ban k}

Indonesia homepage

● _{Foreign Exchange Flow s Report} ● _{Credit Report s}

- Report of Provision of Funds - Debt Rest ruct uring Report

● _{Legal Lending Limit Report} ● _{M at urit y Prof ile Report}

● _{Compliance Direct or Progress Report} ● _{M arket Risk Report}

d. Quart erly Period

● _{Report on Act ual Bank Lending Compared t o}

Business Plan

● _{Published Financial St at ement} ● _{Bank Business Plan Progress Report} ● _{Resolut ion of cust omer complaint report}

e. Semi-Annually Period

● _{Report on Implement at ion and Principal Result}

of Int ernal Audit

● _{Report on implement at ion business plan}

f. Annually Period

● _{Business Plan Report} ● _{Annual Financial St at ement} ● _{Annual Report}

● _{IT Technology Report} ● _{Foreign Borrow ing Report}

g. Three Year Period

● _{Report on Ext ernal Part y Reassessment of Bank}

Int ernal Audit Perf ormance

2. Other Reports

● _{Rep o r t s p er t ai n i n g t o b an k l i cen si n g an d}

est ablishment of off ices

● _{Report s pert aining t o bank management} ● _{Report s pert aining t o bank operat ional} ● _{Special report pert aining t o bank supervision} ● _{Suspicious Financial Transact ion report ( t o PPATK)} ● _{Report pert aining t o product and bank act ivit ies}

H. Reporting by Rural Banks

1. Regular Report s a. M ont hly Period

● _{M ont hly Report}

● _{Legal Lending Limit Report}

b. Semi-Annually Period

● _{Bank Business Plan Progress Report} ● _{Published Financial St at ement}

c. Annually Period

● _{Bank Business Plan} ● _{Annual Financial St at ement}

2. Other Reports

● _{Rep o r t s p er t ai n i n g t o b an k l i cen si n g an d}

est ablishment of off ices

● _{Report s pert aining t o bank management} ● _{Report s pert aining t o bank operat ional} ● _{Special report pert aining t o bank supervision} ● _{Suspicious Financial Transact ion report (t o PPATK)}

VI. BANKING INDICATORS

A. Number of Banks and Bank Off ices

B. Grow t h in Banking Operat ions

C. Funding

E. Ranking of Banks

VII. OTHER

A. Deposit Insurance Agency

The Deposit Insurance Agency (LPS) is a governm ent inst it ut ion w it h t he f ollow ing f unct ions:

a. Prot ect ion of deposit or f unds; and

b. Act ive part icipat ion in maint aining banking syst em st abilit y as appropriat e t o it s pow ers.

In perf orming it s f unct ions, LPS has t he f ollow ing t asks: a. Formulat ing and adopt ing policy f or implement at ion

of t he deposit insurance scheme

b. Operat ion of t he deposit insurance scheme by

● _{Fo rm u lat in g an d ad o p t in g p o licies w it h in t h e}

f ramew ork of act ive part icipat ion in maint aining banking syst em st abilit y;

● _{Formulat ing, adopt ing, and implement ing policies}

f or resolut ion of bank f ailures in t he case of non-syst emically import ant banks; and

● _{Act ion in t he case of f ailure of any syst emically}

important bank.

The LPS can t ake act ion f or resolut ion and rescue of f ailed banks w it h t he f ollow ing pow ers:

a. Takeover and exercise of all right s and pow ers of shareholders, including rights and pow ers of a General M eet ing of Shareholders;

b. Cont rol and management of t he asset s and liabilit ies of a rescued bank;

c. Review, cancellat ion, t erminat ion, and/or amendment of any cont ract binding a rescued bank w it h any t hird part y on t erms adverse t o t he bank; and

d. Sale and/or t ransf er of bank asset s w it hout consent of debtors and/or sale and/or transfer of bank liabilities w it hout consent of credit ors.

B. M oney Laundering

1. M oney Laundering M oney laundering is t he act s of p l acem en t , t r an sf er, p aym en t , exp en d i t u r e, endow ment , donat ion, saf ekeeping, cross border sm uggling, exchange, or ot her act in respect of asset s know n or reasonably suspect ed t o be t he proceeds of crime w it h t he int ent of concealing or disguising t he origin of t hese asset s so t hat t hey purport edly originat e f rom legit imat e act ivit ies.

2. Suspicious Financial Transact ions are:

a. t r an sact io n s in co n sist en t w it h t h e p ro f ile, ch ar act er i st i cs, an d cu st o m ar y p at t er n o f t ransact ions of t he cust omer;

b. cust omer t ransact ions t hat may be reasonably suspect ed of being conduct ed t o circumvent t he reporting requirements for such transactions that apply t o Providers of Financial Services; or c. t ransact ions concluded or abort ed t ransact ions

using asset s suspect ed t o originat e f rom t he proceeds of crime.

3. Proceeds of crim e Proceeds of crim e are asset s o b t ai n ed f ro m t h e f o l l o w i n g cr i m i n al act s: corrupt ion, bribery, sm uggling of m erchandise/ human labor/immigrant s, banking crimes, capit al m ar k et cr i m es, i n su r an ce cr i m es, n arco t i cs, psychot ropic drugs, hum an t raff icking, w eapons sm u g g l i n g , k i d n ap p i n g , t er ro r i sm , t h ef t , em bezzlem ent , f raud, count erf eit ing, gam bling, p ro st it u t io n , t ax evasio n crim es, f o rest crim es, environm ent al crim es, m arit im e crim es, or ot her crimes punishable w it h imprisonment of 4 years or more, committed w ithin the territory of the Republic of Indonesia or out side t he t errit ory of t he Republic of Indonesia and also proscribed as criminal act s under Indonesian law.

4. Report ing Requirement s f or Providers of Financial Services

1. Providers of f inancial services are required t o report t he f ollow ing t o t he Financial Transact ion Report ing and Analysis Cent er (PPATK): a. Suspicious Financial Transact ions

b. Cash f in an cial t ran sact io n s in cu m u lat ive am o u n t s o f Rp 5 0 0 m i l l i o n o r m o re o r equivalent value in foreign currency, w hether in a single t ransact ion or mult iple t ransact ions during 1 w orking day.

2. Suspicious Transaction Reports shall be submitted no lat er t han 3 w orking days af t er t he element o f su sp icio u s t r an sact io n h as co m e t o t h e at t ent ion of t he Provider of Financial Services. 3. Report s of suspicious t ransact ions conduct ed in

cash shall be submit t ed no lat er t han 14 w orking d ays af t er t h e d at e o f t h e t ran sact io n .Th e report ing requirement s f or Providers of Financial Services incorporat ed as banks are exempt f rom t he bank secrecy provisions.

H. Reporting by Rural Banks

1. Regular Report s a. M ont hly Period

● _{M ont hly Report}

● _{Legal Lending Limit Report} b. Semi-Annually Period

● _{Bank Business Plan Progress Report} ● _{Published Financial St at ement} c. Annually Period

● _{Bank Business Plan} ● _{Annual Financial St at ement} 2. Other Reports

● _{Rep o r t s p er t ai n i n g t o b an k l i cen si n g an d} est ablishment of off ices

● _{Report s pert aining t o bank management} ● _{Report s pert aining t o bank operat ional} ● _{Special report pert aining t o bank supervision} ● _{Suspicious Financial Transact ion report (t o PPATK)}

VI. BANKING INDICATORS

A. Number of Banks and Bank Off ices

B. Grow t h in Banking Operat ions

C. Funding

E. Ranking of Banks

VII. OTHER

A. Deposit Insurance Agency

The Deposit Insurance Agency (LPS) is a governm ent inst it ut ion w it h t he f ollow ing f unct ions:

a. Prot ect ion of deposit or f unds; and

b. Act ive part icipat ion in maint aining banking syst em st abilit y as appropriat e t o it s pow ers.

In perf orming it s f unct ions, LPS has t he f ollow ing t asks: a. Formulat ing and adopt ing policy f or implement at ion

of t he deposit insurance scheme

b. Operat ion of t he deposit insurance scheme by ● _{Fo rm u lat in g an d ad o p t in g p o licies w it h in t h e}

f ramew ork of act ive part icipat ion in maint aining banking syst em st abilit y;

● _{Formulat ing, adopt ing, and implement ing policies} f or resolut ion of bank f ailures in t he case of non-syst emically import ant banks; and

● _{Act ion in t he case of f ailure of any syst emically} important bank.

The LPS can t ake act ion f or resolut ion and rescue of f ailed banks w it h t he f ollow ing pow ers:

a. Takeover and exercise of all right s and pow ers of shareholders, including rights and pow ers of a General M eet ing of Shareholders;

b. Cont rol and management of t he asset s and liabilit ies of a rescued bank;

c. Review, cancellat ion, t erminat ion, and/or amendment of any cont ract binding a rescued bank w it h any t hird part y on t erms adverse t o t he bank; and

d. Sale and/or t ransf er of bank asset s w it hout consent of debtors and/or sale and/or transfer of bank liabilities w it hout consent of credit ors.

B. M oney Laundering

1. M oney Laundering M oney laundering is t he act s of p l acem en t , t r an sf er, p aym en t , exp en d i t u r e, endow ment , donat ion, saf ekeeping, cross border sm uggling, exchange, or ot her act in respect of asset s know n or reasonably suspect ed t o be t he proceeds of crime w it h t he int ent of concealing or disguising t he origin of t hese asset s so t hat t hey purport edly originat e f rom legit imat e act ivit ies.

2. Suspicious Financial Transact ions are:

a. t r an sact io n s in co n sist en t w it h t h e p ro f ile, ch ar act er i st i cs, an d cu st o m ar y p at t er n o f t ransact ions of t he cust omer;

b. cust omer t ransact ions t hat may be reasonably suspect ed of being conduct ed t o circumvent t he reporting requirements for such transactions that apply t o Providers of Financial Services; or c. t ransact ions concluded or abort ed t ransact ions

using asset s suspect ed t o originat e f rom t he proceeds of crime.

3. Proceeds of crim e Proceeds of crim e are asset s o b t ai n ed f ro m t h e f o l l o w i n g cr i m i n al act s: corrupt ion, bribery, sm uggling of m erchandise/ human labor/immigrant s, banking crimes, capit al m ar k et cr i m es, i n su r an ce cr i m es, n arco t i cs, psychot ropic drugs, hum an t raff icking, w eapons sm u g g l i n g , k i d n ap p i n g , t er ro r i sm , t h ef t , em bezzlem ent , f raud, count erf eit ing, gam bling, p ro st it u t io n , t ax evasio n crim es, f o rest crim es,

4. Report ing Requirement s f or Providers of Financial Services

1. Providers of f inancial services are required t o report t he f ollow ing t o t he Financial Transact ion Report ing and Analysis Cent er (PPATK): a. Suspicious Financial Transact ions

b. Cash f in an cial t ran sact io n s in cu m u lat ive am o u n t s o f Rp 5 0 0 m i l l i o n o r m o re o r equivalent value in foreign currency, w hether in a single t ransact ion or mult iple t ransact ions during 1 w orking day.

2. Suspicious Transaction Reports shall be submitted no lat er t han 3 w orking days af t er t he element o f su sp icio u s t r an sact io n h as co m e t o t h e at t ent ion of t he Provider of Financial Services. 3. Report s of suspicious t ransact ions conduct ed in

cash shall be submit t ed no lat er t han 14 w orking d ays af t er t h e d at e o f t h e t ran sact io n .Th e report ing requirement s f or Providers of Financial Services incorporat ed as banks are exempt f rom t he bank secrecy provisions.