Certification of Risk Management for Human Resources of General Banks

To:
Board of Directors of General Banks at their place.

COPY

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 28 /SEOJK.03/2022

CONCERNING

CERTIFICATION OF RISK MANAGEMENT FOR HUMAN RESOURCES OF GENERAL BANKS

In light of the implementation of Financial Services Authority Regulation Number 24 of 2022 concerning the Development of Quality of Human Resources of General Banks (State Gazette of the Republic of Indonesia Year 2022 Number 28/OJK, Additional State Gazette of the Republic of Indonesia Number 20/OJK), hereinafter referred to as POJK General Bank Human Resources, Banks are required to continuously develop the quality of their human resources by improving the work competence of human resources and paying attention to the principles of priority and equal distribution of work competence. This is carried out by Banks by involving human resources in competence development in technical, non-technical, and leadership fields, including through Work Competency Certification in the banking sector.

One aspect that is of great concern to Banks is how Banks can manage risks in line with the trends of business and information technology development in the banking industry. Therefore, the improvement of human resource competence in the field of Bank risk management is very necessary so that the implementation of risk management is carried out comprehensively as intended in the Financial Services Authority regulations regarding the implementation of risk management.

The rapid development of business and innovation in the banking and financial services sector also requires Banks to measure and manage risks more effectively. Therefore, the implementation of Bank risk management needs to be carried out comprehensively, including through support for the improvement of work competence in the field of risk management through Risk Management Certification for owned human resources.

Thus, it is necessary to establish regulations regarding Work Competency Certification in the field of risk management so that there is clear guidance on the implementation of certification and human resources that need to obtain work competency certificates in the field of risk management as a reference for competencies that can support the management of Bank business and operations.

With these considerations, the Financial Services Authority establishes regulations regarding Risk Management Certification for General Bank Human Resources as further regulations regarding POJK General Bank Human Resources concerning the field of Work Competency Certification in the banking sector established by the Financial Services Authority, as follows:

I. GENERAL PROVISIONS

1. General Banks, hereinafter referred to as Banks, are Banks that conduct conventional business activities or conduct business activities based on Sharia principles, which in their activities provide services in payment transactions, including branch offices of banks located abroad and Sharia business units.

2. Indonesian National Qualification Framework, hereinafter abbreviated as KKNI, is the Indonesian national qualification framework in accordance with Financial Services Authority Regulations regarding the management of professional certification bodies in the financial services sector.

3. Indonesian National Work Competency Standards, hereinafter abbreviated as SKKNI, are the Indonesian national work competency standards in accordance with Financial Services Authority Regulations regarding the management of professional certification bodies in the financial services sector.

4. Professional Certification Body, hereinafter abbreviated as LSP, is an institution that carries out professional certification activities that have met the requirements and have obtained a license from the National Professional Certification Body.

5. Risk Management Competency Certificate, hereinafter referred to as Risk Management Certificate, is proof of fulfillment of human resource competence in the field of Bank risk management according to applicable competency standards, issued by the banking sector LSP.

6. Board of Directors is the Bank organ authorized and fully responsible for the management of the Bank for the interests of the Bank, in accordance with the purpose and objectives of the Bank and representing the Bank, both in and out of court, in accordance with the articles of association for Banks with the legal form of a limited liability company, organs or equivalent parties for Banks with legal forms other than limited liability companies, or the head of branch offices and officials one level below the head of branch offices for branch offices of banks located abroad, in accordance with Financial Services Authority Regulations regarding general banks and Financial Services Authority Regulations regarding Sharia general banks.

7. Board of Commissioners is the Bank organ tasked with carrying out general and/or specific supervision in accordance with the articles of association and providing advice to the Board of Directors for Banks with the legal form of a limited liability company, organs or equivalent parties for Banks with legal forms other than limited liability companies, or parties appointed to carry out supervisory functions for branch offices of banks located abroad, in accordance with Financial Services Authority Regulations regarding general banks and Financial Services Authority Regulations regarding Sharia general banks.

8. Executive Officials are Bank officials who are directly responsible to members of the Board of Directors or have significant influence on the policy and/or operations of the Bank, including division heads including officials above division heads other than the Board of Directors, heads of regional offices, heads of branch offices, heads of functional offices with positions at least equivalent to branch office heads, heads of risk management work units, heads of compliance work units, and heads of internal audit work units, and/or other equivalent officials, in accordance with Financial Services Authority Regulations regarding general banks and Financial Services Authority Regulations regarding Sharia general banks.

9. Officials other than Executive Officials are officials at the Bank other than Executive Officials in risk management work units, compliance work units, and internal audit work units, as well as officials at the Bank other than Executive Officials in main operational work units who make and implement decisions on risks, including lending/financing, treasury, information technology, and finance.

II. RISK MANAGEMENT CERTIFICATION

1. To support the effective implementation of risk management at Banks, the possession of Risk Management Certificates for human resources is established for:
   a. members of the Board of Directors; b. members of the Board of Commissioners;
   c. Executive Officials; and
   d. Officials other than Executive Officials in:

   1. risk management work units, compliance work units, and internal audit work units; and
   2. main operational work units that make and implement decisions on risks, including lending/financing, treasury, information technology, and finance.

2. Human resources as referred to in item 1 letters a to d must possess a valid Risk Management Certificate while holding their positions.

3. Banks may determine human resources other than members of the Board of Directors, members of the Board of Commissioners, Executive Officials, and Officials other than Executive Officials to participate in Work Competency Certification in the field of banking risk management, hereinafter referred to as Risk Management Certification, adjusted to the needs and internal policies of the Bank.
   Example:
   Banks determine officials and/or staff in work units that carry out legal functions to participate in Risk Management Certification.

4. Risk Management Certification for members of the Board of Directors, members of the Board of Commissioners, Executive Officials, Officials other than Executive Officials, and human resources as referred to in item 3 is organized by LSPs of the banking sector registered with the Financial Services Authority, adjusted to:
   a. competency units referring to SKKNI in the field of banking risk management; and b. qualification levels referring to KKNI in the field of banking risk management, while observing and considering:

   1. the scope and implementation of risk management as regulated in Financial Services Authority regulations, including regarding the implementation of risk management for general banks, implementation of risk management for Sharia general banks and Sharia business units, and integrated risk management implementation for financial conglomerates; and
   2. Bank business activities, namely conventional business activities, Sharia business activities, conventional business activities that have Sharia business units, and Banks in their function as main entities in financial conglomerates, as well as adjusted to recent risk developments related to the banking sector, including cyber security, climate change, and other risk developments.

5. The validity period of the Risk Management Certificate is for a period of 3 (three) years from the date of issuance of the certificate, and can be extended.

6. The validity period for the extension of the Risk Management Certificate is 3 (three) years after the date the validity period of the previous Risk Management Certificate ends.

7. The Risk Management Certification maintenance (refreshment) program, hereinafter referred to as the maintenance program, is a program carried out with the aim of maintaining the competence of holders or owners of Risk Management Certificates in the field of Bank risk management. The maintenance program is carried out by meeting the following requirements:
   a. carried out periodically at least 1 (one) time within a period of 1 (one) year after the Risk Management Certificate is issued; and b. the form of maintenance program activities includes in-house training, seminars, socialization of regulations from competent authorities, workshops, seminars, e-learning, and/or work portfolios, related to the field of Bank risk management.

8. The maintenance program as referred to in item 7 can be used to extend the validity period of the Risk Management Certificate as referred to in item 5, provided it meets the following criteria:
   a. the maintenance program is carried out periodically at least 1 (one) time within a period of 1 (one) year; b. the maintenance program is in the field of Bank risk management; and
   c. the maintenance program and the organizer of the maintenance program are recognized by the banking sector LSP.

9. The banking sector LSP establishes requirements to become an organizer of maintenance programs in the field of Bank risk management and/or criteria for each form of activity recognized as a maintenance program, to extend the validity period of the Risk Management Certificate as referred to in item 5, which at least:
   a. The banking sector LSP establishes:

   1. criteria for forms of activities recognized as maintenance programs, including in-house training, seminars, socialization of regulations from competent authorities, workshops, seminars, e-learning, and/or work portfolios, related to risk management aspects;
   2. quality standards for activities recognized as maintenance programs as referred to in item 1); and
   3. appropriate methods in the implementation of the maintenance program based on activities as referred to in item 1), to ensure the maintenance of competence of Risk Management Certificate owners;
      b. in the event that there are activities organized by the Financial Services Authority that can be recognized as a maintenance program as referred to in letter a item 1), the determination of such activities as maintenance programs recognized by the banking sector LSP is carried out through coordination between the banking sector LSP and the Financial Services Authority; and
      c. The banking sector LSP monitors the implementation of maintenance programs recognized as maintenance programs that can extend the validity period of the Risk Management Certificate.

10. In the event that the maintenance program does not meet the criteria as referred to in item 8, the maintenance program is not recognized and cannot be used to extend the validity period of the Risk Management Certificate. Therefore, if the holder of the Risk Management Certificate wishes to extend the validity period of the Risk Management Certificate, the holder of the Risk Management Certificate must undergo Risk Management Certification again (recertification) with the validity period of the Risk Management Certificate as referred to in item 5.

11. Banks must monitor to ensure that human resources participate in human resource quality development programs through Risk Management Certification and maintain the validity of the Risk Management Certificates owned.

12. Possession of a Risk Management Certificate is one aspect of the assessment of the competence factor in the assessment of fitness and propriety for candidates for members of the Board of Directors and candidates for members of the Board of Commissioners in accordance with Financial Services Authority regulations regarding the assessment of fitness and propriety for key parties of financial service institutions.

13. In the event that members of the Board of Directors, members of the Board of Commissioners, and Executive Officials do not meet the validity of the Risk Management Certificate and/or the relevant parties do not make efforts to meet the validity of the Risk Management Certificate while holding their positions, the Bank must replace members of the Board of Directors, members of the Board of Commissioners, and Executive Officials at the latest:
    a. within a period of 6 (six) months from the end of the validity period of the Risk Management Certificate. During this period, the relevant members of the Board of Directors, members of the Board of Commissioners, and Executive Officials can make efforts to meet the validity of the Risk Management Certificate; or b. within a period of 6 (six) months from the date of determination by the Financial Services Authority regarding the fulfillment of the validity of the Risk Management Certificate to meet certain conditions established by the Financial Services Authority. During this period, the relevant members of the Board of Directors, members of the Board of Commissioners, and Executive Officials can make efforts to meet the validity of the Risk Management Certificate. Certain conditions are based on considerations in the event that the replacement of members of the Board of Directors, members of the Board of Commissioners, or Executive Officials will affect Bank operations.

14. In the event that members of the Board of Directors, members of the Board of Commissioners, and Executive Officials are unable to meet the validity of the Risk Management Certificate within the period as referred to in item 13 letter a or b, the Financial Services Authority may establish another period by considering the efforts made to fulfill the Risk Management Certificate.

15. Banks and/or human resources who possess Risk Management Certificates must administer proof of certificate ownership and human resource participation in maintenance programs.

III. ACCELERATION PROGRAM (FAST TRACK)

1. In implementing Risk Management Certification, banking sector LSPs establish a non-hierarchical certification program, hereinafter referred to as the acceleration (fast track) program, in the Risk Management Certification competency test, including establishing adjustments to the Risk Management Certification scheme and competency test methods to support the acceleration (fast track) program. Banking sector LSPs coordinate with the Financial Services Authority in establishing the acceleration (fast track) program in the Risk Management Certification competency test.

2. The criteria for implementing the acceleration (fast track) program in the Risk Management Certification competency test as referred to in item 1 are:
   a. applicable to parties to be nominated for positions as members of the Board of Directors or members of the Board of Commissioners, whether not yet or already established in the general meeting of shareholders, proven by a letter of introduction for the request for competency test submission signed by members of the Board of Directors or by members of the Board of Commissioners in the event that members of the Board of Directors are unable or refuse to sign the letter of introduction, accompanied by:

   1. a decision of the general meeting of shareholders stating that the relevant party has been appointed as a member of the Board of Directors or member of the Board of Commissioners by the general meeting of shareholders; or
   2. a recommendation from the remuneration and nomination committee in the event that the relevant party is nominated as a member of the Board of Directors or member of the Board of Commissioners and has not been appointed by the general meeting of shareholders; and
      b. considering the work ability or competence of the party to be nominated for a position as a member of the Board of Directors or member of the Board of Commissioners as referred to in letter a, regarding:
   3. profile, namely work experience or portfolio in the field of finance or at financial authorities;
   4. characteristics, namely specific character, values possessed, or other specifics that can be considered related to the Bank; and/or
   5. competency specialization.

3. For parties to be nominated for positions as members of the Board of Directors or members of the Board of Commissioners, the acceleration (fast track) program that meets the criteria as referred to in item 2 can only be carried out by the relevant party in 1 (one) opportunity for the Risk Management Certification competency test at the banking sector LSP.

4. In the event that candidates for members of the Board of Directors or candidates for members of the Board of Commissioners have participated in the acceleration (fast track) program in the Risk Management Certification competency test at the banking sector LSP with an incompetent (fail) result, then the relevant party:
   a. can participate in the Risk Management Certification competency test carried out hierarchically (normal); and b. cannot participate in the next acceleration (fast track) program at the same banking sector LSP or at other banking sector LSPs for the Risk Management Certification competency test.

IV. EQUIVALENCE AND ALIGNMENT OF RISK MANAGEMENT CERTIFICATES

1. Since the implementation of this Circular Letter of the Financial Services Authority, criteria for the equivalence of levels and alignment of levels for human resource owners of valid Risk Management Certificates as previously regulated in Bank Indonesia Regulation Number 11/19/PBI/2009 concerning Risk Management Certification for Management and Officials of General Banks as amended by Bank Indonesia Regulation Number 12/7/PBI/2010 concerning Amendments to Bank Indonesia Regulation Number 11/19/PBI/2009 concerning Risk Management Certification for Management and Officials of General Banks, hereinafter referred to as PBI Risk Management Certification, are established with:
   a. SKKNI in the field of Banking Risk Management as per Minister of Manpower of the Republic of Indonesia Decision Number 218 of 2020 concerning the Determination of Indonesian National Work Competency Standards for the Category of Financial and Insurance Activities, Main Group of Financial Services Activities, Non-Insurance and Pension Funds in the Field of Banking Risk Management; and b. KKNI in the field of Banking Risk Management as per Member of the Board of Commissioners of the Financial Services Authority Decision Number KEP-18/D.02/2021 concerning the Indonesian National Qualification Framework in the Field of Banking Risk Management.

2. The equivalence of levels as referred to in item 1, hereinafter referred to as equivalence, is carried out by comparing and equating the levels as per PBI Risk Management Certification with the national qualification levels in the field of banking risk management in the latest KKNI as referred to in item 1 letter b.

3. The alignment of levels as referred to in item 1, hereinafter referred to as alignment, is focused on new competency units from the latest SKKNI and KKNI as referred to in item 1 letters a and b compared to the previous SKKNI and KKNI.

4. The equivalence criteria as referred to in item 1 are established as follows:

KKNI Qualification Levels	Levels in PBI Risk Management Certification
Level 4	Level 5	Level 6	Level 7
Level 1	Equivalent	Competency Test	Competency Test	Competency Test
Level 2	Equivalent	Competency Test	Competency Test
Level 3	Equivalent	Competency Test	Competency Test
Level 4	Equivalent	Competency Test
Level 5	Equivalent

Explanation:
a. Owners of Level 1 Risk Management Certificates are automatically equivalent to qualification level 4. If the relevant party wishes to fulfill competence to the next level, the relevant party must:

1. fulfill competence at qualification level 5 (competency test 1);
2. fulfill competence at qualification level 6 (competency test 2); and
3. fulfill competence at qualification level 7 (competency test 3).
   b. Owners of Level 2 Risk Management Certificates and owners of Level 3 Risk Management Certificates are automatically equivalent to qualification level 5. If the relevant party wishes to fulfill competence to the next level, the relevant party must:
4. fulfill competence at qualification level 6 (competency test 1); and
5. fulfill competence at qualification level 7 (competency test 2).
   c. Owners of Level 4 Risk Management Certificates are automatically equivalent to qualification level 6. If the relevant party wishes to fulfill competence to the next level, the relevant party must fulfill competence at qualification level 7 (competency test 1).
   d. Owners of Level 5 Risk Management Certificates are automatically equivalent to qualification level 7.

5. For members of the Board of Directors and members of the Board of Commissioners who previously held office and are still holding office at Banks at the time the Risk Management Certification scheme based on the latest KKNI as referred to in item 1 has been implemented or has been validated and/or verified by the competent authority (National Professional Certification Body), alignment of Risk Management Certificate ownership is carried out:
   a. the alignment area is more focused on new competency units from SKKNI and KKNI in the field of banking risk management compared to the previous SKKNI and KKNI; and b. the mechanism and method of alignment are established by the banking sector LSP in coordination with the Financial Services Authority, with the following requirements:
   1. members of the Board of Directors:
      a) for owners of Level 5 Risk Management Certificates or equivalent to qualification level 7, alignment is more focused on new competency units in SKKNI and KKNI as referred to in item 1. b) for owners of Risk Management Certificates:
      i. Level 4 or equivalent to qualification level 6;
      ii. Level 3 or equivalent to qualification level 5; and
      iii. Level 2 or equivalent to qualification level 5,
      alignment is more focused on new competency units in SKKNI and KKNI as referred to in item 1, including other competency units that still need to be fulfilled. After alignment is carried out, the relevant party fulfills competence at qualification level 7.

2. Board of Commissioners members:
   a) for holders of Risk Management Certificate level 5 or equivalent to qualification level 7, and holders of Risk Management Certificate level 4 or equivalent to qualification level 6, alignment is conducted more focusedly for new competency units in the SKKNI and KKNI as referred to in item 1. b) for holders of Risk Management Certificate:
   i. level 3 or equivalent to qualification level 5;
   ii. level 2 or equivalent to qualification level 5; and
   iii. level 1 or equivalent to qualification level 4,
   alignment is conducted more focusedly for new competency units in the SKKNI and KKNI as referred to in item 1, including other competency units that still need to be fulfilled. After alignment is conducted, the relevant individual fulfills the competency at qualification level 6.

6. In the implementation of alignment as referred to in item 5 letter b, coordination is carried out among Sectoral Certification Bodies (LSP) in the banking sector and is implemented within the same time period.

7. For Human Resources holding Risk Management Certificates other than Board of Directors members and Board of Commissioners members as referred to in item 5, including prospective Board of Directors members and prospective Board of Commissioners members, alignment regarding the possession of Risk Management Certificates is conducted by the Sectoral Certification Body (LSP) in the banking sector.

8. The Sectoral Certification Body (LSP) in the banking sector establishes the mechanisms and methods of alignment as referred to in item 7, with alignment mechanisms and methods referring to item 5 letter b.

9. The Financial Services Authority (OJK) has the authority to monitor the implementation of the equivalence and alignment processes.

10. The equivalence and alignment mechanisms in this Circular Letter of the Financial Services Authority will apply if the Risk Management Certification scheme based on the latest KKNI as referred to in item 1 has been implemented or has been validated and/or verified by the competent authority (National Professional Certification Body). In the submission for validation and/or verification of the latest Risk Management Certification scheme to the competent authority (National Professional Certification Body):
    a. it is submitted by each Sectoral Certification Body (LSP) in the banking sector within the same time period; and b. it can be coordinated first among Sectoral Certification Bodies (LSP) in the banking sector and/or with the Financial Services Authority.

11. The Sectoral Certification Body (LSP) in the banking sector establishes transition mechanisms when the Competency Certification scheme for risk management based on SKKNI and KKNI as referred to in item 1 has been implemented or has been validated and/or verified by the competent authority (National Professional Certification Body), compared to the previous scheme.

12. The transition mechanism as referred to in item 11 includes the issuance of Risk Management Certificates, training processes, and/or competency testing for Risk Management Certification that is currently ongoing.

13. Possession of Risk Management Certificates that are still valid before the implementation of the Competency Certification scheme for risk management based on SKKNI and KKNI as referred to in item 1 remains recognized in the assessment of competence and propriety process for prospective Board of Directors members or prospective Board of Commissioners members as long as:
    a. possession of Risk Management Certificates meets the provisions in accordance with the Risk Management Certification Regulation (PBI) as referred to in item 1, and equivalence is conducted as referred to in item 4. b. in the event that after equivalence as referred to in letter a, the qualification level established for Board of Directors members and Board of Commissioners members in accordance with the KKNI as referred to in item 1 is not yet met:

    1. fulfillment of the qualification level, including through alignment of Risk Management Certificate possession as referred to in item 7, can be fulfilled no later than 6 (six) months after being appointed as a Board of Directors member or Board of Commissioners member.
    2. The Financial Services Authority may establish other time periods other than as in item 1), among others by considering efforts to fulfill requirements or considerations regarding the composition of the Bank's management.
    3. in the event that Board of Directors members or Board of Commissioners members have not met the qualification level established for Board of Directors members or Board of Commissioners members in accordance with the KKNI as referred to in item 1 within the time period as in items 1) and 2), the Bank must replace the relevant Board of Directors members or Board of Commissioners members at the next General Meeting of Shareholders.

14. The equivalence and alignment mechanisms are established by the Financial Services Authority and are carried out through coordination with Sectoral Certification Bodies (LSP) in the banking sector, in the event:
    a. there is an update to the SKKNI and KKNI, from the SKKNI and KKNI as referred to in item 1; and/or b. equivalence and alignment with the latest SKKNI and KKNI are required.

15. Criteria for equivalence for holders of Risk Management Certificates that are still valid as per the Risk Management Certification Regulation (PBI) for parties other than Human Resources may refer to item 4.

16. Criteria for alignment for holders of Risk Management Certificates that are still valid as per the Risk Management Certification Regulation (PBI) for parties other than Human Resources may refer to item 7.

V. PROFESSIONAL CERTIFICATION BODIES

1. Sectoral Certification Bodies (LSP) in the banking sector that conduct competency testing for Risk Management Certification must maintain the quality of Risk Management Certification competency testing, at least through:
   a. periodic review of methods, competency test materials, and assessors assigned; and b. updating competency test materials in accordance with the latest developments in risk management aspects that align with the needs and development of banking in the future.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja

2. Sectoral Certification Bodies (LSP) in the banking sector may establish professional titles for parties who already possess Risk Management Certificates in the banking sector.

3. The establishment of professional titles as referred to in item 2 is conducted through coordination among Sectoral Certification Bodies (LSP) in the banking sector.

4. Sectoral Certification Bodies (LSP) in the banking sector must have information systems, both within each Sectoral Certification Body (LSP) in the banking sector or among Sectoral Certification Bodies (LSP) in the banking sector, among others to:
   a. ensure that there are no prospective Board of Directors members or prospective Board of Commissioners members who follow the acceleration (fast track) program in Risk Management Certification competency testing more than 1 (one) time; and b. monitor the maintenance programs conducted by organizers of maintenance programs in accordance with the requirements established by Sectoral Certification Bodies (LSP) in the banking sector.

5. Sectoral Certification Bodies (LSP) in the banking sector must not offer or provide education and/or training services for applicants or participants of Risk Management Certification, including assisting other parties in preparing such services.

VI. CLOSING

The provisions in this Circular Letter of the Financial Services Authority shall take effect on the date of determination.

Determined in Jakarta on December 22, 2022
EXECUTIVE HEAD OF BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
DIAN EDIANA RAE