Implementation of Compliance Functions for Commercial Banks

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 46 /POJK.03/2017
CONCERNING
IMPLEMENTATION OF COMPLIANCE FUNCTIONS FOR COMMERCIAL BANKS BY THE GRACE OF GOD THE ALMIGHTY THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that the complexity of banking business activities is increasing in line with the development of information technology, globalization, and financial market integration; b. that the complexity of banking business activities has a very large impact on the risk exposure faced by banks, so efforts are needed to mitigate the risks of banking business activities;
c. that to mitigate the risks of banking business activities, various efforts are needed, both preventive (ex-ante) and curative (ex-post);
d. that preventive (ex-ante) efforts can be undertaken by complying with various applicable banking rules to reduce or minimize the risks of banking business activities; e. that to realize the matters referred to in letter d, it is necessary to increase the role and function of compliance and the existing compliance work units in banks so that the potential risks of banking business activities can be anticipated earlier;

f. that in connection with the transfer of the functions, duties, and authorities for the regulation and supervision of financial services in the banking sector from Bank Indonesia to the Financial Services Authority, it is necessary to regulate again the implementation of compliance functions for commercial banks; g. that based on the considerations referred to in letters a through f, it is necessary to establish a Financial Services Authority Regulation concerning the Implementation of Compliance Functions for Commercial Banks; Recalling:

1. Law Number 7 of 1992 concerning Banking (State Gazette of the Republic of Indonesia Year 1992 Number 31, Supplement to the State Gazette of the Republic of Indonesia Number 3472) as amended by Law Number 10 of 1998 concerning Amendments to Law Number 7 of 1992 concerning Banking (State Gazette of the Republic of Indonesia Year 1998 Number 182, Supplement to the State Gazette of the Republic of Indonesia Number 3790);
2. Law Number 21 of 2008 concerning Sharia Banking (State Gazette of the Republic of Indonesia Year 2008 Number 94, Supplement to the State Gazette of the Republic of Indonesia Number 4867);
3. 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);
   DECIDING:
   Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE IMPLEMENTATION OF COMPLIANCE FUNCTIONS FOR COMMERCIAL BANKS.

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

1. Bank means Commercial Banks as referred to in Law Number 7 of 1992 concerning Banking as amended by Law Number 10 of 1998 concerning Amendments to Law Number 7 of 1992 concerning Banking, including branch offices of banks located abroad, and Sharia Commercial Banks as referred to in Law Number 21 of 2008 concerning Sharia Banking.
2. Board of Directors means:
   a. for Banks in the form of a Limited Liability Company, the Board of Directors as referred to in Law Number 40 of 2007 concerning Limited Liability Companies; b. for Banks in the form of legal entities:

1. Regional Public Enterprises or Regional State-Owned Enterprises, the Board of Directors as referred to in Law Number 23 of 2014 concerning Regional Government as amended several times, lastly by Law Number 9 of 2015 concerning the Second Amendment to Law Number 23 of 2014 concerning Regional Government;
2. Regional Enterprises, the Board of Directors at Banks that have not yet changed their form into Regional Public Enterprises or Regional State-Owned Enterprises as referred to in Law Number 23 of 2014 concerning Regional Government as amended several times, lastly by Law Number 9 of 2015 concerning the Second Amendment to Law Number 23 of 2014 concerning Regional Government;
   c. for Banks in the form of a Cooperative legal entity, the managers as referred to in Law Number 25 of 1992 concerning Cooperatives;
   d. for branch offices of banks located abroad, the head of the branch office of the bank located abroad, namely the branch office head and officials one level below the branch office head.

3. Board of Commissioners means:
   a. for Banks in the form of a Limited Liability Company, the Board of Commissioners as referred to in Law Number 40 of 2007 concerning Limited Liability Companies; b. for Banks in the form of legal entities:

1. Regional Public Enterprises, the supervisory board as referred to in Law Number 23 of 2014 concerning Regional Government as amended several times, lastly by Law Number 9 of 2015 concerning the Second Amendment to Law Number 23 of 2014 concerning Regional Government;
2. Regional State-Owned Enterprises, the commissioners as referred to in Law Number 23 of 2014 concerning Regional Government as amended several times, lastly by Law Number 9 of 2015 concerning the Second Amendment to Law Number 23 of 2014 concerning Regional Government;
3. Regional Enterprises, the supervisors at Banks that have not yet changed their form into Regional Public Enterprises or Regional State-Owned Enterprises as referred to in Law Number 23 of 2014 concerning Regional Government as amended several times, lastly by Law Number 9 of 2015 concerning the Second Amendment to Law Number 23 of 2014 concerning Regional Government;
   c. for Banks in the form of a Cooperative legal entity, the supervisors as referred to in Law Number 25 of 1992 concerning Cooperatives;
   d. for branch offices of banks located abroad, the party appointed to carry out supervisory functions.

4. Sharia Principles are Sharia principles as referred to in Law Number 21 of 2008 concerning Sharia Banking.
5. Compliance Culture are values, behaviors, and actions that support the creation of compliance with Financial Services Authority regulations and statutory regulations, including Sharia Principles for Sharia commercial banks and Sharia business units.
6. Compliance Function is a series of preventive (ex-ante) actions or steps to ensure that policies, regulations, systems, and procedures, as well as business activities carried out by the Bank, comply with Financial Services Authority regulations and statutory regulations, including Sharia Principles for Sharia commercial banks and Sharia business units, and to ensure the Bank's compliance with commitments made by the Bank to the Financial Services Authority and/or other competent supervisory authorities.
7. Compliance Risk is the risk arising from the Bank's failure to comply with and/or implement statutory regulations, including Sharia Principles for Sharia commercial banks and Sharia business units.

Article 2
(1) The Board of Directors is required to foster and realize the implementation of Compliance Culture at all levels of the organization and business activities of the Bank.
(2) The Board of Directors is required to ensure the implementation of the Bank's Compliance Function.
(3) The Board of Commissioners is required to supervise the implementation of the Compliance Function.

CHAPTER II
COMPLIANCE FUNCTION OF THE BANK
Article 3
The Bank's Compliance Function includes actions to:
a. realize the implementation of Compliance Culture at all levels of the organization and business activities of the Bank; b. manage the Compliance Risks faced by the Bank;
c. ensure that policies, regulations, systems, and procedures, as well as business activities carried out by the Bank, comply with Financial Services Authority regulations and statutory regulations, including Sharia Principles for Sharia commercial banks and Sharia business units; and
d. ensure the Bank's compliance with commitments made by the Bank to the Financial Services Authority and/or other competent supervisory authorities.

Article 4
(1) The Bank is required to have a director who oversees the Compliance Function and to form a compliance work unit.
(2) The Compliance Function as referred to in Article 3 is carried out by the compliance work unit.

Article 5
The director who oversees the Compliance Function and the compliance work unit in Sharia commercial banks and/or conventional commercial banks that have Sharia business units are required to coordinate with the Sharia supervisory board regarding the implementation of the Compliance Function concerning Sharia Principles.

Article 6
(1) The Board of Commissioners is required to actively supervise the Compliance Function, by:
a. evaluating the implementation of the Bank's Compliance Function at least 2 (two) times in one year; and b. providing suggestions to improve the quality of the implementation of the Bank's Compliance Function. (2) Based on the results of the evaluation of the implementation of the Compliance Function, the Board of Commissioners submits suggestions for improving the quality of the implementation of the Compliance Function to the president director, with a copy to the director who oversees the Compliance Function.

CHAPTER III
DIRECTOR WHO OVERSEES THE COMPLIANCE FUNCTION
First Section
Independence and Criteria
Article 7
(1) The director who oversees the Compliance Function is required to meet independence requirements.
(2) The president director and/or vice president director are prohibited from holding concurrent positions as the director who oversees the Compliance Function.
(3) The director who oversees the Compliance Function is prohibited from overseeing functions:
a. business and operations; b. risk management that makes decisions on the Bank's business activities;
c. treasury;
d. finance and accounting; e. logistics and procurement of goods or services; f. information technology; and/or g. internal audit.

Article 8
Candidates for director who oversees the Compliance Function are required to have integrity and adequate knowledge of Financial Services Authority regulations and statutory regulations.

Second Section
Appointment, Dismissal, and/or Resignation of the Director Who Oversees the Compliance Function
Article 9
(1) The appointment, dismissal, and/or resignation of the director who oversees the Compliance Function refers to statutory regulations concerning commercial banks and statutory regulations concerning Sharia commercial banks. (2) In the event that the director who oversees the Compliance Function is temporarily unable to perform his/her duties for more than 7 (seven) consecutive working days, the performance of the relevant duties must be temporarily replaced by another director until the director who oversees the Compliance Function can perform his/her duties again. (3) In the event that the director who oversees the Compliance Function is permanently unable, resigns, or his/her term of office expires, the Bank is required to immediately appoint a replacement for the director who oversees the Compliance Function, at the latest 6 (six) months after the director who oversees the Compliance Function is permanently unable, resigns, or his/her term of office expires. (4) During the process of replacing the director who oversees the Compliance Function as referred to in paragraph (3), the Bank is required to designate or assign one of the other directors to temporarily perform the duties of the director who oversees the Compliance Function. (5) The director who temporarily performs the duties of the director who oversees the Compliance Function, whether due to temporary inability as referred to in paragraph (2) or permanent inability, resignation, or expiration of term of office as referred to in paragraph (4), must meet the provisions regarding concurrent positions as referred to in Article 7 paragraph (2) and the prohibition on overseeing functions as referred to in Article 7 paragraph (3). (6) In the event that there is no other director as referred to in paragraph (5), the position of the director who oversees the Compliance Function may be temporarily held concurrently by another director who oversees the functions as referred to in Article 7 paragraph (3). (7) The temporary replacement of the position of the director who oversees the Compliance Function as referred to in paragraph (2) and paragraph (4) must be reported to the Financial Services Authority.

Third Section
Duties and Responsibilities of the Director Who Oversees the Compliance Function
Article 10
(1) The duties and responsibilities of the director who oversees the Compliance Function must at least:
a. formulate strategies to encourage the creation of the Bank's Compliance Culture; b. propose compliance policies or compliance principles to be established by the Board of Directors;
c. establish compliance systems and procedures used to formulate the Bank's internal regulations and guidelines;
d. ensure that all policies, regulations, systems, and procedures, as well as business activities carried out by the Bank comply with Financial Services Authority regulations and statutory regulations, including Sharia Principles for Sharia commercial banks and Sharia business units; e. minimize the Bank's Compliance Risk; f. take preventive actions so that policies and/or decisions taken by the Bank's Board of Directors or the heads of branch offices of banks located abroad do not deviate from Financial Services Authority regulations and statutory regulations; and g. perform other duties related to the Compliance Function. (2) The duties and responsibilities as referred to in paragraph (1) do not eliminate the rights and obligations of the director who oversees the Compliance Function as a member of the Bank's Board of Directors as regulated in the Law concerning Limited Liability Companies, in the event that a decision is needed regarding certain actions by all members of the Bank's Board of Directors.

Article 11
The director who oversees the Compliance Function is required to report the implementation of his/her duties and responsibilities as referred to in Article 10 to the president director, with a copy to the Board of Commissioners, at least quarterly.

CHAPTER IV
COMPLIANCE WORK UNIT
First Section
Independence and Criteria
Article 12
(1) The compliance work unit must be independent.
(2) Officials and staff in the compliance work unit are prohibited from being placed in positions facing conflicts of interest in carrying out the responsibilities of the Compliance Function.
(3) The compliance work unit in conventional commercial banks that have Sharia business units must be supported by human resources with knowledge and/or understanding of Sharia banking operations.

Article 13
The head of the compliance work unit must meet at least the following criteria:
a. meet independence requirements; b. master Financial Services Authority regulations and statutory regulations;
c. not perform other duties outside the Compliance Function; and
d. have a high commitment to implementing and developing Compliance Culture.

Article 14
The appointment, dismissal, or replacement of the head of the compliance work unit must be reported to the Financial Services Authority.

Second Section
Duties and Responsibilities of the Compliance Work Unit
Article 15
In carrying out the Compliance Function as referred to in Article 3, the duties and responsibilities of the compliance work unit must at least:
a. create steps to support the creation of Compliance Culture in all business activities of the Bank at every level of the organization; b. identify, measure, monitor, and control Compliance Risks by referring to Financial Services Authority regulations governing the application of risk management for commercial banks and Financial Services Authority regulations governing the application of risk management for Sharia commercial banks and Sharia business units;
c. assess and evaluate the effectiveness, adequacy, and suitability of the Bank's policies, regulations, systems, and procedures with statutory regulations;
d. review and/or recommend the updating and improvement of the Bank's policies, regulations, systems, and procedures to comply with Financial Services Authority regulations and statutory regulations, including Sharia Principles for Sharia commercial banks and Sharia business units; e. make efforts to ensure that the Bank's policies, regulations, systems and procedures, as well as business activities comply with Financial Services Authority regulations and statutory regulations; and f. perform other duties related to the Compliance Function.

CHAPTER V
REPORTING
Article 16
The director who oversees the Compliance Function is required to submit reports to the Financial Services Authority regarding the implementation of his/her duties, including:
a. compliance work plans contained in the Bank's Business Plan; b. compliance reports; and
c. special reports regarding policies and/or decisions of the Board of Directors that, in the opinion of the director who oversees the Compliance Function, have deviated from Financial Services Authority regulations and/or statutory regulations, as part of the duties of the director who oversees the Compliance Function as referred to in Article 10 paragraph (1) letter f.

Article 17
(1) Reports as referred to in Article 16 letter b must be signed by the director who oversees the Compliance Function, and submitted to the Financial Services Authority semi-annually and received by the Financial Services Authority at the latest 1 (one) month after the reporting period ends, with a copy to the Board of Commissioners and the president director. (2) In the event that the deadline for submitting the compliance report as referred to in paragraph (1) falls on a Saturday, Sunday, and/or holiday, the compliance report is submitted on the next working day. (3) The Bank is considered late in submitting the compliance report if the report is received by the Financial Services Authority beyond the final submission deadline as referred to in paragraph (1), but has not exceeded 1 (one) month after the final submission deadline. (4) The Bank is considered not to have submitted the compliance report if the report has not been received by the Financial Services Authority after the final deadline for lateness as referred to in paragraph (3). (5) Reports as referred to in Article 16 letter c are submitted to the Financial Services Authority at the latest 7 (seven) working days since the director who oversees the Compliance Function becomes aware of the deviation.

CHAPTER VI
REPORTING DELIVERY ADDRESS
Article 18
(1) Reports on the appointment, dismissal, or replacement of the head of the compliance work unit as referred to in Article 14 are submitted online through the Financial Services Authority's reporting system. (2) In the event that the submission of reports through the Financial Services Authority's reporting system as referred to in paragraph (1) cannot yet be done, the Bank submits reports online by referring to statutory regulations concerning reports from the head office of commercial banks. (3) Reports as referred to in Article 9 paragraph (7) and Article 16 are submitted offline to:
a. the Relevant Bank Supervision Department or Sharia Banking Department, for Banks whose head office or branch offices of banks located abroad are in the Special Capital Region of Jakarta Province; or b. the Regional Office of the Financial Services Authority or the Local Office of the Financial Services Authority according to the area where the Bank's head office is located.

CHAPTER VII
SANCTIONS
Article 19
Banks that do not comply with the provisions as referred to in Article 2, Article 4 paragraph (1), Article 5, Article 6 paragraph (1), Article 7, Article 8, Article 9 paragraph (2), Article 9 paragraph (3), Article 9 paragraph (4), Article 9 paragraph (7), Article 10, Article 11, Article 12, Article 13, Article 14, Article 15, Article 16, and/or Article 17 paragraph (1) are subject to administrative sanctions in the form of:
a. written reprimand; b. reduction in health level by lowering the governance factor rating in the health level assessment;
c. suspension of certain business activities;
d. dismissal of members of the Board of Directors and members of the Board of Commissioners of the Bank and subsequently appointing and appointing temporary replacements until the General Meeting of Shareholders (GMS) or Annual Cooperative Meeting (ACM) appoints permanent replacements with the approval of the Financial Services Authority; and/or e. inclusion of members of the Board of Directors, members of the Board of Commissioners, employees, and/or shareholders of the Bank in the list of parties receiving the "Unfit" status in the competency and propriety test as regulated in statutory regulations concerning the competency and propriety test (fit and proper test).

Article 20
(1) Banks that are late in submitting reports as referred to in Article 17 paragraph (3) are subject to administrative sanctions in the form of a fine of Rp1,000,000.00 (one million rupiah) per day of delay. (2) Banks that do not submit reports as referred to in Article 17 paragraph (4) are subject to administrative sanctions in the form of a fine of Rp100,000,000.00 (one hundred million rupiah) and a written reprimand by the Financial Services Authority.

CHAPTER VIII
CLOSING PROVISIONS
Article 21
Upon the commencement of this Financial Services Authority Regulation, Bank Indonesia Regulation Number 13/2/PBI/2011 concerning the Implementation of Compliance Functions for Commercial Banks (State Gazette of the Republic of Indonesia Year 2011 Number 6, Supplement to the State Gazette of the Republic of Indonesia Number 5187) is repealed and declared invalid.

Article 22
This Financial Services Authority Regulation takes effect on the date of its promulgation.

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

To ensure that everyone knows it, the promulgation of this Financial Services Authority Regulation is ordered by placing it in the State Gazette of the Republic of Indonesia.
Established in Jakarta on July 12, 2017
CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY, signed
MULIAMAN D. HADAD

Promulgated in Jakarta on July 12, 2017
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2017 NUMBER 152

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 46 /POJK.03/2017
CONCERNING
IMPLEMENTATION OF COMPLIANCE FUNCTIONS FOR COMMERCIAL BANKS
I. GENERAL
Banking business activities continue to change and increase in line with the development of information technology, globalization, and financial market integration, so that the complexity of their activities is increasingly high. The increasing complexity of banking business activities results in greater challenges and risk exposure faced. Given the increasing challenges and risks of banking business, various types of efforts are needed to mitigate these risks. These efforts can be preventive (ex-ante) or curative (ex-post). Preventive (ex-ante) efforts are very necessary to reduce or minimize the potential risks of banking business activities that are estimated to occur. Therefore, it is necessary to increase the role and Compliance Function as well as the compliance work unit in managing Compliance Risk. Good and timely management of Compliance Risk is expected to minimize the impact of risks as early as possible. Thus, the role and Compliance Function as well as the compliance work unit in the future will not only look at events that are preventive (ex-ante) but must also be able to manage Compliance Risk in line with the application of risk management that has been running in the Bank as a whole.

II. ARTICLE BY ARTICLE

Article 1
Sufficiently clear.

Article 2
Paragraph (1)
Sufficiently clear.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Specifically for branches of banks domiciled abroad, the implementation of supervision over the Compliance Function is adjusted to the organizational structure applicable to the respective bank.

Article 3
Letter a
Sufficiently clear.

Letter b
The action of managing Compliance Risk is implemented by referring to the regulations of the Financial Services Authority (OJK) regarding the application of risk management for general banks and the regulations of the Financial Services Authority (OJK) regarding the application of risk management for Sharia general banks and Sharia business units.

Letter c
Sufficiently clear.

Letter d
Sufficiently clear.

Article 4
Sufficiently clear.

Article 5
Sufficiently clear.

Article 6
Sufficiently clear.

Article 7
Paragraph (1)
What is meant by "independence requirements" is having no financial relations, managerial relations, ownership relations, and/or family relations up to the second degree with members of the Board of Directors, members of the Board of Commissioners, and/or controlling shareholders, or relations with the Bank that can influence the relevant party's ability to act independently as referred to in the regulations of the Financial Services Authority (OJK) regarding the application of governance for general banks and regulations regarding the implementation of good corporate governance for Sharia general banks and Sharia business units.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Letter a
What is meant by "business function" or "operational function" includes, among others, fund collection and/or fund disbursement activities and agency activities.

Letter b
Sufficiently clear.

Letter c
Sufficiently clear.

Letter d
Sufficiently clear.

Letter e
Sufficiently clear.

Letter f
Sufficiently clear.

Letter g
Sufficiently clear.

Article 8
The assessment of criteria for candidates for directors who oversee the Compliance Function refers to regulations regarding the assessment of competence and propriety and regulations of the Financial Services Authority (OJK) regarding the utilization of foreign labor and knowledge transfer programs in the banking sector.

Article 9
Paragraph (1)
Sufficiently clear.

Paragraph (2)
What is meant by "temporary impediment" includes, among others, leave, illness, and/or official duties.

Paragraph (3)
What is meant by "permanent impediment" includes, among others, loss of Indonesian citizenship, death, physical disability, mental disability, and/or other conditions that do not allow the relevant party to perform their duties well.

Paragraph (4)
Sufficiently clear.

Paragraph (5)
Sufficiently clear.

Paragraph (6)
Sufficiently clear.

Paragraph (7)
Sufficiently clear.

Article 10
Paragraph (1)
Letter a
Sufficiently clear.

Letter b
What is meant by "compliance policy" is the principle used to formulate systems, procedures, and internal guidelines in order to harmonize between the Bank's commercial interests and compliance with statutory regulations.

Letter c
Sufficiently clear.

Letter d
Sufficiently clear.

Letter e
Sufficiently clear.

Letter f
Including preventive actions includes, among others, providing a dissenting opinion in the event of policies and/or decisions that deviate from the regulations of the Financial Services Authority (OJK) and statutory regulations. The responsibility of the director overseeing the Compliance Function in carrying out preventive actions is limited to the authority of the director overseeing the Compliance Function.

Letter g
What is meant by "other tasks related to the Compliance Function" includes, among others, monitoring and maintaining the Bank's compliance with commitments made by the Bank to the Financial Services Authority (OJK) or other competent supervisory authorities.

Paragraph (2)
What is meant by "specific actions" is actions related to corporate actions, including mergers, consolidations, takeovers, capital increases by issuing pre-emptive rights (right issue), and initial public offerings (IPO).

Article 11
For branches of banks domiciled abroad, reports are submitted to the head of the branch of the bank domiciled abroad with a copy to the competent authority supervising the branch of the bank domiciled abroad, according to the bank's organizational structure.

Article 12
Paragraph (1)
What is meant by "mandatory independent compliance unit" is that the compliance unit must be formed separately and free from the influence of other units, and must have direct access to the director overseeing the Compliance Function.

The compliance unit is formed at the Bank's headquarters but implements the Compliance Function throughout the Bank's branch network.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Sufficiently clear.

Article 13
Letter a
What is meant by "independence requirements" is having no financial relations, managerial relations, ownership relations, and/or family relations up to the second degree with members of the Board of Directors, members of the Board of Commissioners, and/or controlling shareholders, or relations with the Bank that can influence the relevant party's ability to act independently as referred to in the regulations of the Financial Services Authority (OJK) regarding the application of governance for general banks and regulations regarding the implementation of good corporate governance for Sharia general banks and Sharia business units.

Letter b
Sufficiently clear.

Letter c
Sufficiently clear.

Letter d
Sufficiently clear.

Article 14
Reports on the appointment, dismissal, or replacement of the head of the compliance unit refer to reporting regulations for executive officials as regulated in statutory regulations regarding general banks and statutory regulations regarding Sharia general banks.

Article 15
Letter a
Steps to support the creation of Compliance Culture include, among others, the creation of systems, programs, frameworks (framework), compliance charters, compliance codes of conduct, or compliance policies.

Letter b
In order to carry out the process of managing Compliance Risk, the compliance unit coordinates with the risk management unit.

Letter c
Regarding these tasks and responsibilities, the compliance unit can perform, among others:

1. assessing drafts of new policies, regulations, systems, or procedures; and
2. taking the initiative to improve policies, regulations, systems, or procedures based on information obtained.

Letter d
Sufficiently clear.

Letter e
Sufficiently clear.

Letter f
What is meant by "other tasks related to the Compliance Function" includes, among others:

1. ensuring the Bank's compliance with commitments made by the Bank to the Financial Services Authority (OJK) and/or other competent supervisory authorities;
2. conducting socialization to all Bank employees regarding matters related to the Compliance Function, especially regarding applicable regulations; and/or
3. acting as a contact person for the Bank's compliance issues for internal and external parties.

Article 16
Letter a
Compliance work plan reports consist of at least:
a. plans for evaluating internal guidelines; and b. activity plans to encourage and/or maintain Compliance Culture, including plans for socializing regulations.

The procedure for submitting compliance work plans included in the Bank's Business Plan is implemented by referring to the regulations of the Financial Services Authority (OJK) regarding general bank business plans and statutory regulations regarding business plans for Sharia general banks and Sharia business units.

Letter b
Compliance reports consist of at least:
a. the implementation of the Compliance Function's tasks; b. Compliance Risks faced;
c. potential Compliance Risks estimated to be faced in the future; and
d. Compliance Risks mitigation that has been implemented.

Compliance reports are presented comparatively for 2 (two) reporting periods.

Letter c
Special reports from the director overseeing the Compliance Function regarding Board policies and/or decisions that deviate from the regulations of the Financial Services Authority (OJK) and/or statutory regulations consist of at least:
a. the names of the Directors and their fields of responsibility; b. the date of taking policies or activity decisions;
c. the deviating activities performed;
d. the regulations of the Financial Services Authority (OJK) and/or statutory regulations violated; and e. the impacts caused in the short and medium term, both financially, in terms of business continuity disruption, or in terms of Bank reputation decline.

Article 17
Paragraph (1)
Sufficiently clear.

Paragraph (2)
What is meant by "holiday" is national holidays established by the central government and/or local holidays established by local governments.

Paragraph (3)
Example:
Compliance reports for the period from January to June 2017, the deadline for submitting compliance reports is July 31, 2017.

Compliance reports are considered late if received by the Financial Services Authority (OJK) between August 1 and August 31, 2017.

Paragraph (4)
Compliance reports are considered not submitted if by August 31, 2017, compliance reports are not received by the Financial Services Authority (OJK) or are received by the Financial Services Authority (OJK) after August 31, 2017.

Paragraph (5)
Sufficiently clear.

Article 18
Sufficiently clear.

Article 19
Sufficiently clear.

Article 20
Paragraph (1)
Sufficiently clear.

Paragraph (2)
The imposition of administrative sanctions in the form of fines does not eliminate the Bank's obligation to submit reports.

Article 21
Sufficiently clear.

Article 22
Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6095