Financial Innovation in the Digital Sector of the Financial Services Industry

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 13/POJK.02/2018
CONCERNING
DIGITAL FINANCIAL INNOVATION IN THE FINANCIAL SERVICES SECTOR BY THE GRACE OF GOD THE ALMIGHTY, THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering: a. that with technological advancements, digital financial innovation cannot be ignored and needs to be managed so as to provide maximum benefits for the public interest; b. that digital financial innovation needs to be directed to produce responsible, safe digital financial innovation that prioritizes consumer protection and has well-managed risks;
c. that based on the considerations referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning Digital Financial Innovation in the Financial Services Sector;
Recalling: Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);

RESOLVES:
Decree: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING DIGITAL FINANCIAL INNOVATION IN THE FINANCIAL SERVICES SECTOR.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following terms are defined as:

1. Digital Financial Innovation, hereinafter abbreviated as IKD, is an activity of renewing business processes, business models, and financial instruments that provide new added value in the financial services sector by involving the digital ecosystem.
2. Financial Service Institution is an institution that carries out activities in the Banking, Capital Market, Insurance, Pension Fund, Financing Institution, and Other Financial Service Institutions sectors as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.
3. Provider is any party that organizes IKD.
4. Regulatory Sandbox is a testing mechanism conducted by the Financial Services Authority to assess the reliability of the Provider's business processes, business models, financial instruments, and governance.
5. IKD Ecosystem is a community consisting of authorities, Providers, consumers, and/or other parties that utilize digital platforms together to promote IKD that is beneficial to society.

CHAPTER II
OBJECTIVES, SCOPE, AND CRITERIA OF IKD
Section One
Objectives of IKD
Article 2
(1) IKD is implemented by Providers responsibly.
(2) The regulation of IKD is conducted with the objectives to:
a. support the development of responsible IKD; b. support effective monitoring of IKD; and
c. encourage synergy within the digital financial services ecosystem.
Section Two
Scope and Criteria of IKD
Article 3
The scope of IKD includes:
a. transaction settlement; b. capital raising;
c. investment management;
d. fund collection and distribution; e. insurance; f. market support; g. other digital financial support; and/or h. other financial services activities.
Article 4
The criteria for IKD include:
a. being innovative and forward-looking; b. using information and communication technology as the main means of providing services to consumers in the financial services sector;
c. supporting financial inclusion and literacy;
d. being beneficial and widely usable; e. being integrable into existing financial services; f. using a collaborative approach; and g. considering consumer protection and data protection aspects.

CHAPTER III
REGISTRATION
Section One
Legal Entity Form of Providers
Article 5
(1) Providers consist of:
a. Financial Service Institutions; and/or b. other parties carrying out activities in the financial services sector.
(2) Providers as referred to in paragraph (1) letter b must be in the form of a limited liability company or a cooperative.
(3) Providers as referred to in paragraph (1) letter b are not permitted to manage portfolios or exposure.
Section Two
Registration Application
Article 6
(1) Providers who will or have carried out activities within the scope as referred to in Article 3 and meet the criteria as referred to in Article 4 are required to submit a registration application to the Financial Services Authority using the form contained in the Appendix which is an integral part of this Financial Services Authority Regulation. (2) The registration obligation as referred to in paragraph (1) is exempted for Providers who have already been registered and/or have obtained a license from the Financial Services Authority. (3) The Financial Services Authority conducts registration of registration applications submitted by Providers by considering the completeness of documents submitted by the Providers, including:
a. copy of the Provider's legal entity establishment deed along with identity and complete data of the management; b. brief written explanation of the product;
c. other data and information related to IKD activities; and
d. business plan.
(4) In the event that the Financial Services Authority has provided an electronic registration system for IKD registration, the registration application is submitted to the Financial Services Authority electronically through the Financial Services Authority's registration system.

CHAPTER IV
REGULATORY SANDBOX
Section One
Basic Principles of Regulatory Sandbox
Article 7
(1) The Financial Services Authority organizes a Regulatory Sandbox to ensure that IKD meets the criteria as referred to in Article 4.
(2) Providers undergoing the Regulatory Sandbox process may obtain approval from the Financial Services Authority for temporary exemption from certain Financial Services Authority Regulations. (3) Temporary exemption as referred to in paragraph (2) may be conducted as long as it meets the following conditions:
a. while the Provider is within the Regulatory Sandbox; b. obtaining approval from the relevant supervisory unit within the Financial Services Authority; and
c. temporary exemption only applies to Financial Services Authority Regulations that are non-prudential.
Section Two
Requirements for Providers as Regulatory Sandbox Participants
Article 8
(1) The Financial Services Authority designates Providers for testing in the Regulatory Sandbox.
(2) The designation as referred to in paragraph (1) is conducted against Providers that meet at least the following requirements:
a. registered as IKD with the Financial Services Authority or based on a request letter submitted by the relevant supervisory unit within the Financial Services Authority; b. being a new business model;
c. having a business scale with a wide market coverage;
d. being registered in the Provider Association; and e. other criteria established by the Financial Services Authority.
Section Three
Conduct of Regulatory Sandbox
Article 9
The Regulatory Sandbox is conducted for a maximum period of 1 (one) year and may be extended for 6 (six) months if necessary.
Article 10
During the implementation of the Regulatory Sandbox, Providers are required to meet the following provisions:
a. notifying any changes to the IKD owned; b. committing to open any information related to the implementation of the Regulatory Sandbox;
c. participating in education and counseling necessary for the development of the financial services sector business;
d. participating in every implementation of coordination and cooperation with authorities or other ministries/institutions; and e. collaborating with Financial Service Institutions or parties carrying out activities in the financial services sector.
Article 11
(1) The results of the Regulatory Sandbox for Providers are declared with the status:
a. recommended; b. improvement; or
c. not recommended.
(2) In the event that the Provider has a recommended status as referred to in paragraph (1) letter a, the Financial Services Authority will provide a registration recommendation according to the business activities of the Provider. (3) In the event that the test results have an improvement status, the Financial Services Authority may grant a time extension with a maximum period of 6 (six) months from the date of status determination. (4) In the event that the test results have a not recommended status, the Provider cannot re-apply for the same IKD. (5) Providers with a not recommended status as referred to in paragraph (4) are removed from registration as Providers.
Article 12
(1) In the event that test results show a connection with the authority of other entities, the Financial Services Authority will coordinate with that authority. (2) In the implementation of the Regulatory Sandbox, Providers may coordinate with Financial Service Institutions and other related parties while remaining under the coordination of the Financial Services Authority. (3) Implementation regulations regarding the procedures for conducting the Regulatory Sandbox are further regulated in a Financial Services Authority Circular.
Section Four
Information Disclosure
Article 13
(1) Providers are required to disclose important and relevant information during the testing period in the Regulatory Sandbox and submit it to the unit responsible for IKD research and development within the Financial Services Authority. (2) The Financial Services Authority may request additional information from Providers during the implementation of the Regulatory Sandbox.

CHAPTER V
REGISTRATION
Article 14
(1) Providers with a recommended status have the right to submit a registration application to the Financial Services Authority.
(2) Providers having the same type of IKD as the Provider referred to in paragraph (1) have the same right to submit a registration application to the Financial Services Authority. (3) Providers must submit a registration application to the Financial Services Authority no later than 6 (six) months from the determination of the recommended status. (4) In the event that the Provider does not submit a registration application until the given registration deadline has passed, the registration recommendation status is revoked and declared invalid. (5) The Financial Services Authority provides a certificate of registration for Providers who have completed the registration process. (6) Providers who are not Financial Service Institutions and already have a registered status may include the registration certificate number in every offer or promotion of their products or services. (7) Providers with a recommended status who have submitted a registration application to the Financial Services Authority but cannot meet the registration requirements until the end of the given time period, their recommended status and registration are revoked and declared invalid.
Article 15
(1) Providers submit a registration application accompanied by documents as referred to in Article 6 paragraph (3) insofar as there are changes to the aforementioned documents. (2) Approval of the registration application is conducted within a maximum period of 30 (thirty) days from the receipt of the complete registration application documents as referred to in paragraph (1).
Article 16
In the event that a Provider receives an improvement status as referred to in Article 11 paragraph (1) letter b but does not make adequate improvements until the extension period expires, the Regulatory Sandbox test result status will be changed to not recommended as referred to in Article 11 paragraph (1) letter c.

CHAPTER VI
MONITORING
Article 17
(1) The Financial Services Authority has the authority to conduct monitoring of Providers who have been registered and listed with the Financial Services Authority. (2) To complement the monitoring mechanism by the Financial Services Authority, Providers are required to apply the principle of self-monitoring. (3) Monitoring as referred to in paragraph (1) includes monitoring of self-assessment reports, on-site monitoring, and/or other monitoring methods. (4) Implementation regulations regarding Financial Services Authority monitoring guidelines are further regulated in a Financial Services Authority Circular.
Section One
Principles of Self-Monitoring
Article 18
(1) Providers are required to apply self-monitoring principles at least including:
a. information and communication technology governance principles in accordance with legislation; b. consumer protection in accordance with this Financial Services Authority Regulation;
c. education and socialization to consumers;
d. confidentiality of consumer data and/or information, including data and/or transaction information; e. risk management and prudence principles; f. anti-money laundering and counter-terrorism financing principles in accordance with legislation; and g. inclusive and information openness principles. (2) To implement monitoring, Providers are required to inventory main risks at least including:
a. strategic risk; b. systemic operational risk;
c. individual operational risk;
d. money laundering and terrorism financing risk; e. consumer data protection risk; f. third-party service usage risk; g. cyber risk; and h. liquidity risk.
Article 19
Providers are required to have devices that can increase efficiency and compliance with the monitoring process to be conducted by the Financial Services Authority.
Section Two
Monitoring by the Financial Services Authority and Other Parties
Article 20
The Financial Services Authority conducts monitoring of Providers.
Article 21
(1) Providers form a Provider Association.
(2) Providers who are registered or listed to undergo testing in the Regulatory Sandbox become members of the association designated by the Financial Services Authority. (3) The Association as referred to in paragraph (2) establishes standards using a market discipline approach applicable to its members at least including:
a. formulating operational rules, industry standards, and codes of ethics, according to different business types; b. receiving and forwarding reports and receiving complaints;
c. compiling financial statistics and monitoring risks and research on macro and micro financial issues;
d. acting as a liaison between the Financial Services Authority and Providers to increase regulatory support and information exchange; e. establishing self-regulation mechanisms and sanctions for member violations of rules and codes of ethics; and f. conducting education, training, and consumer protection as well as domestic and international cooperation. (4) Standards as referred to in paragraph (3) refer to standards established by the Financial Services Authority. (5) Implementation regulations regarding the designation of Provider Associations are further regulated in a Financial Services Authority Circular.
Article 22
(1) IKD supervision covers principles:
a. risk and technology-based supervision; and b. market discipline-based supervision.
(2) Providers are required to apply risk and technology-based supervision principles against IKD.
(3) Risk and technology-based supervision principles as referred to in paragraph (2) at least include:
a. a balanced approach between prudential aspects and support for innovation; b. collaboration with authorities and other institutions in conducting supervision, regulation, and standard setting for digital financial services;
c. emphasis on reliable governance and risk management aspects in utilizing technology and controlling its digital ecosystem; and
d. investigating the application of good processes related to customer identification, risk management, and operational supervision conducted by third parties. (4) Market discipline-based supervision as referred to in paragraph (1) letter b must consider:
a. professional and market ethics standards; b. product and service transparency;
c. competitive and inclusive markets;
d. suitability with consumer needs; e. immediate complaint handling mechanisms; f. consumer and transaction data security and confidentiality aspects; g. regulatory compliance aspects; h. platform standards and security aspects;
i. information technology governance aspects;
j. market risk; k. counter-party and clearing agency risk;
l. online education aspects; and
m. electronic certificate aspects.

CHAPTER VII
REPORTING
Article 23
Providers undergoing the Regulatory Sandbox process are required to submit quarterly performance reports to the Financial Services Authority.
Article 24
Providers who have been registered with the Financial Services Authority are required to prepare monthly risk self-assessment reports and submit them to the Financial Services Authority.
Article 25
In addition to providing reports as referred to in Article 24, Providers are required to report to consumers regarding matters related to investment performance, investment value, and/or portfolios owned by consumers.
Article 26
Providers as referred to in Article 24 and Article 25 are required to grant the Financial Services Authority access rights to the reporting.
Article 27
To process risk self-assessment reports, the Financial Services Authority has the authority to summon or request additional information from Providers.

CHAPTER VIII
GOVERNANCE
Article 28
(1) Providers are required to have a strategic plan for electronic systems supporting the Provider's business plan.
(2) Providers are required to formulate policies, procedures, and standards at least including aspects:
a. business strategy; b. consumer protection;
c. risk, and capital;
d. human resource development; e. product and service development and planning; f. information technology operations; g. communication networks; h. information security;
i. disaster recovery plan;
j. user services; and k. use of information technology service providers.
(3) Providers are required to have human resources with expertise and/or background in information technology and finance.
(4) Providers who have been registered and listed with the Financial Services Authority are required to submit a registration application to the Financial Services Authority if there are changes related to the business model, business processes, institutional structure, and IKD operations owned.

CHAPTER IX
DATA CENTERS
Article 29
Providers are required to locate data centers and disaster recovery centers within the territory of Indonesia.

CHAPTER X
DATA PROTECTION AND CONFIDENTIALITY
Article 30
(1) Providers are required to maintain the confidentiality, integrity, and availability of personal data, transaction data, and financial data they manage from the time the data is obtained until the data is destroyed. (2) The provisions for the utilization of user data and information obtained by Providers must meet the following conditions:
a. obtaining consent from users; b. communicating the limits of data and information utilization to users;
c. communicating any changes in the purpose of data and information utilization to users in the event of changes in the purpose of data and information utilization; and
d. the media and methods used in obtaining data and information are guaranteed to be confidential, secure, and intact.

CHAPTER XI
EDUCATION AND CONSUMER PROTECTION
Article 31
(1) Providers are required to apply basic consumer protection principles, namely:
a. transparency; b. fair treatment;
c. reliability;
d. confidentiality and security of consumer data/information; and e. handling complaints and resolving consumer disputes simply, quickly, and at an affordable cost. (2) Providers are required to provide a technology-based consumer service center. (3) The technology-based consumer service center at least consists of providing consumer service centers that can be conducted independently or through other parties.
Article 32
(1) Providers are required to provide and/or communicate current information to the Financial Services Authority and consumers regarding digital financial service activities. (2) Information as referred to in paragraph (1) is formulated in documents or other means that can be used as evidence.
Article 33
(1) Providers are required to communicate information to consumers regarding the acceptance, postponement, or rejection of digital financial service applications. (2) In the event that the Provider communicates postponement or rejection information as referred to in paragraph (1), the Provider is required to communicate the reasons for the postponement or rejection.
Article 34
Providers are required to carry out activities to increase financial literacy and inclusion.

CHAPTER XII
OTHER COMPLIANCE ASPECTS
Article 35
Registered Providers are required to apply anti-money laundering and counter-terrorism financing programs in the financial services sector for consumers in accordance with Financial Services Authority Regulations regarding the application of anti-money laundering and counter-terrorism financing programs in the financial services sector.

CHAPTER XIII
COORDINATION AND COOPERATION
Section One
IKD Center
Article 36
The Financial Services Authority may conduct coordination and/or cooperation to create an IKD Center with:
a. other authorities within the country; b. central and regional governments;
c. financial technology associations and innovation centers outside the Financial Services Authority;
d. experts and academics; and/or e. authorities in other countries, international organizations, and/or international institutions.
Section Two
IKD Ecosystem
Article 37
(1) Providers who have been registered and/or listed with the Financial Services Authority may cooperate with Financial Service Institutions to create IKD ecosystem synergy. (2) Providers must play a role in creating the digital financial services ecosystem and aligning mutually supportive digital services in Indonesia.

CHAPTER XIV
PROHIBITIONS
Article 38
(1) Providers are prohibited from providing data and/or information regarding consumers to third parties.
(2) The prohibition as referred to in paragraph (1) is exempted in the event:
a. the consumer gives electronic consent; and/or b. the Provider is required by legislation to provide data and/or information regarding consumers to third parties. (3) Cancellation or partial change of consent for disclosure of data and/or information as referred to in paragraph (2) letter a is conducted electronically by the consumer in the form of an electronic document.

CHAPTER XV
SANCTION PROVISIONS
Article 39
(1) Without prejudice to criminal provisions in the financial services sector, the Financial Services Authority has the authority to impose administrative sanctions on any party that violates the provisions of this Financial Services Authority Regulation, including parties causing the violation, in the form of:
a. written warning; b. fine, namely the obligation to pay a certain amount of money;
c. cancellation of approval; and/or
d. cancellation of registration.
(2) Administrative sanctions as referred to in paragraph (1) letters b to d may be imposed with or without preceding the imposition of an administrative sanction in the form of a written warning as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of a fine as referred to in paragraph (1) letter b may be imposed separately or together with the imposition of administrative sanctions as referred to in paragraph (1) letters c and d.
Article 40
In addition to administrative sanctions as referred to in Article 39, the Financial Services Authority may take specific actions against any party that violates the provisions of this Financial Services Authority Regulation.

CHAPTER XVI
TRANSITIONAL PROVISIONS
Article 41
(1) Cooperation agreements between Financial Services Institutions and Organizers that have not yet been recorded and/or registered with the Financial Services Authority may continue for a maximum period of 3 (three) years from the date this Financial Services Authority Regulation is promulgated. (2) In the event that registration requirements for Organizers that have been given a recommended status are not yet regulated, Organizers remain obligated to carry out registration with the following document completeness:
a. a copy of the deed of establishment of the Organizer's legal entity along with identity completeness data of the management; b. a brief written explanation regarding the product;
c. other data and information related to Digital Financial Innovation activities; and
d. a business plan.

CHAPTER XVII
CLOSING PROVISIONS
Article 42
Provisions regarding recording obligations shall take effect 1 (one) month from the date this Financial Services Authority Regulation is promulgated.
Article 43
This Financial Services Authority Regulation shall take effect on the date of its promulgation.

This copy is in accordance with the original
Director of Legal Affairs 1
Legal Department signed
Yuliana

To ensure everyone knows it, order the promulgation of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia. Determined in Jakarta on 15 August 2018 CHAIRMAN OF THE COMMISSIONERS COUNCIL FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, signed WIMBOH SANTOSO

Promulgated in Jakarta on 16 August 2018
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2018 NUMBER 135

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 13 /POJK.02/2018
REGARDING
DIGITAL FINANCIAL INNOVATION IN THE FINANCIAL SERVICES SECTOR

I. GENERAL
Digital Financial Innovation (IKD) plays an important role in supporting faster, cheaper, easier, and wider financial services coverage so that it can reach remote areas in order to narrow the high economic disparity between regions. The presence of other technologies also supports the creation of more efficient financial services that are in line with the needs of the community. The role of financial services with low operational costs and small scale is very suitable for serving the micro, small, and medium segments. Innovation has two sides: the side that provides benefits or the side that has the potential to disrupt traditional financial services. The disruption effect that will occur can cause instability in the financial sector and unhealthy competition. In order to minimize the negative impact of innovation, innovation needs to be directed to provide maximum benefits for the community and prioritize good governance to create consumer protection. In addition, synergy is needed between Financial Services Institutions and IKD non-Financial Services Institutions to create synergy and minimize competition.

Innovation needs to be nurtured through the development of a digital financial ecosystem that supports the intended ecosystem by involving many interacting elements to obtain mutual benefits, including relevant authorities. Coordination among players within the ecosystem will be facilitated by the Financial Services Authority in the form of a Fintech Center (Pusat IKD). In addition, to nurture IKD, it is also necessary to carry out monitoring based on activity (activity-based supervision) and institution-based supervision approaches. IKD regulation and monitoring apply a balanced principle between consumer protection and prudence principles with innovation and competition. This principle is implemented in the form of regulation and monitoring by market players themselves (market discipline). The Authority establishes principle-based regulations that regulate the main regulations as a reference for the industry to formulate more detailed implementation regulations or operational standards for their business. Market players are asked to deepen the regulatory principles through the determination of detailed operational standards adjusted to market dynamics, technology, and consumer protection to maintain integrity and effectiveness. Organizers need to form a specific institution for the determination of standards related to operational aspects, business conduct, and business ethics that are recognized and implemented jointly by their members. The institution coordinates intensively with the Financial Services Authority so that supervision of IKD runs optimally. As a means to bring together industry players and regulators, a Regulatory Sandbox is formed. Through this forum, identification and observation by the authority will be carried out on the dynamics and risks of digital financial services market. With an understanding of new business models, the authority can determine mitigation efforts to maintain financial system stability. Therefore, by considering the matters mentioned above, it is necessary to establish a Financial Services Authority Regulation regarding Digital Financial Innovation in the Financial Services Sector.

II. ARTICLE BY ARTICLE
Article 1
Clear enough.
Article 2
Paragraph (1)
What is meant by "responsibly" is the use of new or better products, services, and existing financial processes to meet the needs of consumers, the business world, and the community that continues to develop by, among other things:
a. applying good governance and risk management principles; b. aligned with the overall business strategy;
c. beneficial to the general public;
d. prioritizing consumer protection and data confidentiality; and e. supporting financial inclusion and literacy.
Paragraph (2)
Innovation is different from business process improvement because innovation not only increases the efficiency and effectiveness of the sale of financial products and services but also creates new added value. The scope of this regulation only covers IKD that uses information and communication technology. Letter a Clear enough. Letter b What is meant by "supporting effective IKD monitoring" is the development of IKD by the Organizer must be accompanied by risk-based monitoring that pays attention to governance and risk management by prioritizing prudence, fairness, healthy competition, transparency, and consumer protection principles. Letter c What is meant by "encouraging synergy within the digital financial services ecosystem" is that the IKD Ecosystem is expected to be able to nurture innovation in the field of financial services to be more efficient and increase consumer satisfaction. The digital financial services ecosystem consists of authorities, financial institutions, accelerators, Organizers, facilitators, incubators, capacity builders, digital technology, entrepreneurs, and consumers who interact to support economic growth through the utilization of talents, experts, and observers engaged in the creative economy.
Article 3
Letter a
In practice, the settlement of ordinary transactions is also called settlement.
Transaction settlement is among others related to investment settlement.
Letter b
What is meant by "capital raising" includes among others equity crowdfunding, virtual exchange and smart contract, and alternative due diligence. Letter c What is meant by "investment management" includes among others advance algorithm, cloud computing, capabilities sharing, open source information technology, automated advice and management, social trading, and retail algorithmic trading.

Letter d
What is meant by "fund raising and disbursement" includes among others application-based technology lending (P2P lending), alternative adjudication, virtual technologies, mobile 3.0, and third-party application programming interface. Letter e What is meant by "insurance" includes among others sharing economy, autonomous vehicle, digital distribution, and securitization and hedge fund. Letter f What is meant by "market support" includes among others artificial intelligence/machine learning, machine readable news, social sentiment, big data, market information platform, and automated data collection and analysis. Letter g What is meant by "other digital financial support" includes among others social/eco crowdfunding, Islamic digital financing, e-waqf, e-zakat, robo advise and credit scoring. Letter h What is meant by "other financial services activities" includes among others invoice trading, vouchers, tokens, and blockchain application-based products.
Article 4
The initial assessment of criteria regarding the potential for innovation for Financial Services Institutions is carried out by the relevant supervisory unit of work at the Financial Services Authority, while for Organizers other than Financial Services Institutions through the recording procedure to the unit of work that oversees IKD research and development at the Financial Services Authority.
Article 5
Paragraph (1)
Clear enough.
Paragraph (2)
Clear enough.
Paragraph (3)
What is meant by "not allowed to manage portfolios or exposure" is that the Organizer only provides a platform to facilitate transactions and financial services.
Article 6
Paragraph (1)
The recording application submitted by the Organizer is a requirement for the Organizer to be able to follow the Regulatory Sandbox process.
The recording application by Organizers other than Financial Services Institutions is submitted by the board of directors to the unit of work that oversees IKD research and development at the Financial Services Authority using the form contained in the Appendix which is an integral part of this Financial Services Authority Regulation. Paragraph (2) The recording application for Financial Services Institutions that carry out IKD to enter the Regulatory Sandbox testing is submitted by the Financial Services Institution to the relevant supervisory unit of work at the Financial Services Authority with a copy to the unit of work that oversees IKD research and development at the Financial Services Authority using the form as contained in the Appendix which is an integral part of this Financial Services Authority Regulation. Paragraph (3) Clear enough. Paragraph (4) Clear enough.

Article 7
Clear enough.
Article 8
Paragraph (1)
Clear enough.
Paragraph (2)
Letter a
Organizers in forms other than Financial Services Institutions that have been recorded with the Financial Services Authority do not need to submit a new application letter to be included in the Regulatory Sandbox. The application for Organizers in the form of Financial Services Institutions is different from the recording application as referred to in Article 6. The application in question is an application submitted by the relevant supervisory unit of work at the Financial Services Authority to the unit of work that oversees IKD research and development at the Financial Services Authority so that the Financial Services Institution's innovation can enter the Regulatory Sandbox testing. Letter b Clear enough. Letter c Clear enough. Letter d Clear enough. Letter e Clear enough.
Article 9
Clear enough.
Article 10
Clear enough.

Article 11
Clear enough.
Article 12
Paragraph (1)
What is meant by "other authorities" are government agencies, authorities, experts, associations, and other organizations in the financial services sector both domestic and foreign to support the implementation of the Regulatory Sandbox and IKD development. Paragraph (2) Clear enough. Paragraph (3) Clear enough.
Article 13
Paragraph (1)
What is meant by "important and relevant information" includes among others cyber attack incidents.
Paragraph (2)
Clear enough.
Article 14
Paragraph (1)
The registration application is submitted by the Organizer to the relevant supervisory unit of work at the Financial Services Authority.
Paragraph (2)
Organizers who have the same type of IKD as the Organizer referred to in paragraph (1) include Organizers that have been recorded or have not yet been recorded with the Financial Services Authority but have the same type of IKD as the Organizer that has been given a recommended status. Paragraph (3) Clear enough. Paragraph (4) Clear enough. Paragraph (5) Clear enough. Paragraph (6) Clear enough. Paragraph (7) Clear enough.
Article 15
Clear enough.
Article 16
Clear enough.
Article 17
Clear enough.
Article 18
Paragraph (1)
Letter a
Clear enough.
Letter b
Clear enough.
Letter c
The socialization material provided to consumers must at least relate to the risks of IKD.
Letter d
Clear enough.

Letter e
Clear enough.
Letter f
Clear enough.
Letter g
Clear enough.
Paragraph (2)
Clear enough.
Article 19
Devices that can increase efficiency and compliance need to be implemented by forming a special unit (regulatory technology) within the IKD Organizer. This unit can cooperate with other parties (including cooperation with IKD or associations) and still maintain data and information confidentiality. The scope of regulatory technology must at least include aspects:
a. compliance is an action to provide automatic notifications regarding rule changes both at the national and global levels; b. identity control and management is in order to implement the know your customer principle and anti-money laundering and counter-terrorism financing;
c. risk management is a device that enables risk reporting based on transactions, consolidated risk, and internal risk reporting including risk limit monitoring; and;
d. reporting is automatic integrated reporting that is carried out efficiently, simply, and improves reporting accuracy; e. transaction monitoring is a device that enables monitoring and auditing of transactions to avoid fraud and risk violations; and f. transaction automation system is a system that includes margin, fee, and yield calculations that are in accordance with agreements, and do not violate business conduct.

Article 20
Clear enough.
Article 21
Clear enough.
Article 22
Paragraph (1)
Letter a
What is meant by "risk and technology-based monitoring" is monitoring of Organizers that have been registered with the Financial Services Authority using technology (supervisory technology). The monitoring is intended to increase the effectiveness and efficiency of monitoring Organizers regarding compliance with applicable regulations. The scope of monitoring includes among others:
a. data-input approach is electronic reporting using data packages with standard formats; b. data-pull approach is reporting in raw data format;
c. real-time access is access that allows monitoring at any time;
d. reporting utilities are devices that generate electronic reporting; e. gathering intelligence from unstructured data is the collection and analysis of unstructured data such as social media, socialization materials, agreements with consumers, and so on; and f. regulatory submission and data quality management is a device that enables the submission of reports along with validation and control of the quality of reported data.

Letter b
Clear enough.
Paragraph (2)
Clear enough.
Paragraph (3)
Letter a
What is meant by "the balanced approach between prudential aspects and support for innovation" is the authority held by the Financial Services Authority to take certain actions against Organizers in certain conditions, by considering among other things aspects of business scale and systemic impact. Letter b Clear enough. Letter c Clear enough. Letter d Clear enough. Paragraph (4) Clear enough.
Article 23
Periodic quarterly performance reports are submitted to the unit of work that oversees IKD research and development at the Financial Services Authority. Organizers in the form of Financial Services Institutions submit innovations in products or services tested through the Regulatory Sandbox separately and distinguished from the reporting of the overall activities of Financial Services Institutions reported to the relevant supervisory unit of work at the Financial Services Authority.
Article 24
Clear enough.

Article 25
Clear enough.
Article 26
Clear enough.
Article 27
Clear enough.
Article 28
Paragraph (1)
Clear enough.
Paragraph (2)
Clear enough.
Paragraph (3)
Clear enough.
Paragraph (4)
Every innovation always brings impact and risk so that if there are changes regarding business models, business processes, and others for IKD that has been recorded and registered with the Financial Services Authority, the Organizer records the IKD changes again and follows the Regulatory Sandbox testing again.
Article 29
Clear enough.
Article 30
Clear enough.
Article 31
Paragraph (1)
Minimum consumer protection standards refer to Financial Services Authority Regulation Number 1/POJK.07/2013 regarding Consumer Protection in the Financial Services Sector, however, consumer protection principles still refer to every change in Financial Services Authority Regulations regarding consumer protection. Paragraph (2) Clear enough. Paragraph (3) The scope of technology-based customer service centers (customer service tech) includes among others:
a. multi-channel communication channels is the submission of complaints via various media such as voice, electronic, or social media; b. knowledge management is the process of identification, creation, review, publication, and provision of multimedia content that enables explanations to consumers through web self-service;
c. complaint recording application is the application in question which, in addition to generating consumer complaint data that can be analyzed, also allows communication between consumers;
d. customer service analytics is consumer service that can be optimal according to the problems submitted; and e. agent productivity data is the recording of agent activities in handling consumer complaints and speed in handling complaints in accordance with the Organizer's internal policies.
Article 32
Clear enough.
Article 33
Clear enough.

Article 34
Clear enough.
Article 35
Clear enough.
Article 36
The Fintech Center is a communication facility to identify, nurture, supervise all Organizers, and ensure consumer protection in Indonesia. With the existence of the Fintech Center, it is expected to facilitate coordination and collaboration between relevant authorities and Organizers. Letter a Clear enough. Letter b Clear enough. Letter c The innovation center is a container for innovation and IKD development that plays a role in providing recommendations and inputs for the digital ecosystem of the financial services industry. In practice, innovation centers outside the Financial Services Authority are also commonly called innovation hubs. Letter d Clear enough. Letter e Clear enough.
Article 37
Clear enough.
Article 38
Clear enough.
Article 39
Clear enough.

Article 40
Clear enough.
Article 41
Clear enough.
Article 42
Clear enough.
Article 43
Clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6238

This copy is in accordance with the original
Director of Legal Affairs 1
Legal Department signed
Yuliana

APPENDIX
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 13 /POJK.02/2018
REGARDING
DIGITAL FINANCIAL INNOVATION IN THE
FINANCIAL SERVICES SECTOR

ORGANIZER RECORDING APPLICATION FORM
Number : .......................... ....., ........... 20 ...
Attachment : ..........................
Subject : Recording Application
Digital Financial Innovation Organizer
To
Honorable Vice Chairman of the Commissioners Council of the Financial Services Authority u.p. Commissioner Deputy of OJK Institute Referring to Financial Services Authority Regulation Number /POJK.01/2018 regarding Digital Financial Innovation in the Financial Services Sector, we hereby submit an application for the recording of the Organizer on behalf of ....... . To complete the aforementioned application, we hereby submit the following documents:
a. deed of establishment of the legal entity including the articles of association and any amendments (if any) that have been approved/agreed upon by the competent authority or notified to the competent authority in accordance with legislation; b. proof of identity completeness data of the management;
c. brief written explanation regarding the product;
d. other data and information related to IKD activities; and e. business plan.

Thus our application and for your attention, we thank you.
Yours faithfully,
Board of Directors ...........
Stamp Duty
Rp.6000,-
..................................
(Clear Name and Signature)
) Cross out what is not needed
Determined in Jakarta on 15 August 2018
CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY, signed
WIMBOH SANTOSO