OJK Circular Letter No. 15/SEOJK.05/2019 Regarding Reassessment of Key Parties of Non-Bank Financial Service Institutions

To:

Board of Directors of Insurance Companies;
Board of Trustees and Acting Board of Trustees of Pension Funds;
Board of Directors of Financing Companies;
Board of Directors of Venture Capital Companies;
Board of Directors of Guarantee Institutions; and
Board of Directors of Pawnshop Companies,
at their respective locations.

COPY

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 15 /SEOJK.05/2019

REGARDING

REASSESSMENT OF KEY PARTIES OF NON-BANK FINANCIAL SERVICE INSTITUTIONS

In relation to the mandate of Article 23 of the Financial Services Authority Regulation Number 34/POJK.03/2018 concerning Reassessment of Key Parties of Financial Service Institutions (State Gazette of the Republic of Indonesia Year 2018 Number 259, Supplement to the State Gazette of the Republic of Indonesia Number 6285), it is necessary to regulate provisions concerning the reassessment of key parties of non-bank financial service institutions in this Financial Services Authority Circular Letter as follows:

I. GENERAL PROVISIONS

Financial Service Institutions, hereinafter abbreviated as LJK, are Financial Service Institutions as referred to in the Financial Services Authority Regulation Number 34/POJK.03/2018 concerning Reassessment of Key Parties of Financial Service Institutions.
Non-Bank Financial Service Institutions, hereinafter abbreviated as LJKNB, are:
a. Insurance Companies are insurance companies, Sharia insurance companies, reinsurance companies, Sharia reinsurance companies, insurance brokerage companies, reinsurance brokerage companies, and insurance loss assessors; b. Pension Funds are legal entities that manage and run programs promising pension benefits, including those conducting all business activities based on Sharia principles;
c. Financing Companies are business entities that conduct financing activities for the procurement of goods and/or services, including those conducting all business activities based on Sharia principles;
d. Guarantee Institutions are guarantee companies, Sharia guarantee companies, reinsurance guarantee companies, and Sharia reinsurance guarantee companies that conduct guarantee activities; e. Venture Capital Companies, hereinafter abbreviated as PMV, are business entities that conduct venture capital business activities, venture capital fund management, fee-based service activities, and other business activities with the approval of the Financial Services Authority, including those conducting all business activities based on Sharia principles; f. Pawnshop Companies are private pawnshop companies and government pawnshop companies, including those conducting business activities based on Sharia principles.
Key Parties are parties who own, manage, supervise, and/or have significant influence on LJKNB, including those who no longer own, manage, supervise, and/or have influence at the time the reassessment is conducted.
Controlling Shareholders, hereinafter abbreviated as PSP, are legal entities, individuals, and/or business groups that own shares or shares equivalent to those of LJKNB and have the ability to exercise control over LJKNB.
Control is an action aimed at influencing the management and/or policies of a company, including LJKNB, in any way, whether directly or indirectly.
General Meeting of Shareholders, hereinafter abbreviated as RUPS, is:
a. a company organ that has authority not given to the Board of Directors or Board of Commissioners within the limits determined by the law on limited liability companies and/or the articles of association for LJKNB with the legal form of a limited liability company; or b. an organ or party equivalent to letter a, for LJKNB with a legal form or business entity other than a limited liability company.
Board of Directors is:
a. a company organ that has the authority and is fully responsible for the management for the interests of the company, in accordance with the purpose and objectives of the company and represents the company, both inside and outside of court, in accordance with the provisions of the articles of association for LJKNB with the legal form of a limited liability company; or b. an organ or party equivalent to letter a, for LJKNB with a legal form or business entity other than a limited liability company.
Board of Commissioners is:
a. a company organ tasked with conducting general and/or specific supervision in accordance with the articles of association and providing advice to the Board of Directors for LJKNB with the legal form of a limited liability company; or b. an organ or party equivalent to letter a, for LJKNB with a legal form or business entity other than a limited liability company.
Sharia Supervisory Board is a part of the organ of Insurance Companies, employer pension funds, financial institution pension funds, Financing Companies, Guarantee Institutions, PMV, or Pawnshop Companies that has the task and supervision over the implementation of business activities to ensure they are in accordance with Sharia principles.
Controlling Party of an Insurance Company is a party who directly or indirectly has the ability to determine the Board of Directors and Board of Commissioners and/or influence the actions of the Board of Directors and/or Board of Commissioners of the Insurance Company.
Internal Auditor is an official at the Insurance Company responsible for evaluating and improving the effectiveness of risk management, control, and corporate governance processes, working independently and in accordance with practice standards.
Company Actuary is an official at insurance companies, Sharia insurance companies, reinsurance companies, and Sharia reinsurance companies, who is appointed and responsible for managing the financial impact of risks faced by the company, working independently and in accordance with practice standards.
Controlling Key Party is PSP and/or Controlling Party of an Insurance Company.
Executive Key Party is members of the Board of Directors, acting board members of Pension Funds, members of the Board of Commissioners, or members of the Sharia Supervisory Board.
Official Key Party is Internal Auditors or Company Actuaries.

II. KEY PARTIES SUBJECT TO REASSESSMENT

Key Parties subject to the provisions in this Financial Services Authority Circular Letter include:
a. For Insurance Companies, including:
1. Controlling Party of the Insurance Company;
2. members of the Board of Directors;
3. members of the Board of Commissioners;
4. members of the Sharia Supervisory Board;
5. Internal Auditor; and
6. Company Actuary;
  b. For Employer Pension Funds, including:
7. members of the Board of Directors;
8. members of the Board of Commissioners; and
9. members of the Sharia Supervisory Board;
  c. For Financial Institution Pension Funds, including:
10. acting board members; and
11. members of the Sharia Supervisory Board;
  d. For Financing Companies, Guarantee Institutions, PMV, and Pawnshop Companies, including:
12. PSP;
13. members of the Board of Directors;
14. members of the Board of Commissioners; and
15. members of the Sharia Supervisory Board.
Reassessment of Key Parties as referred to in item 1 includes:
a. Key Parties who are currently serving or exercising Control over LJKNB and there are indications of involvement and/or responsibility for integrity, financial feasibility, financial reputation, and/or competence issues; b. parties who, at the time of being a Key Party at an LJKNB, had indications of involvement and/or responsibility for integrity, financial feasibility, financial reputation, and/or competence issues, but at the time of reassessment:
1. have become shareholders of another LJK, Controlling Party of another Insurance Company, and/or work at another LJK, for example, during an examination at PT DEF Multifinance, violations were found committed by the Financing Director of PT DEF Multifinance, namely Mr. A. From document research, it was known that the violation involved the Finance Director of PT DEF Multifinance, namely Mr. B, who had become Finance Director at PT DEF Ventura Syariah. In this case, the parties subject to reassessment are Mr. A as the Financing Director of PT DEF Multifinance and Mr. B as the former Finance Director of PT DEF Multifinance; or
2. no longer hold shares in an LJK, Controlling Party of an Insurance Company, and/or no longer work at an LJK, for example, during an examination at PT XYZ Life Insurance, violations were found committed by Mr. C as the Compliance Director who had finished his term. In this case, the party subject to reassessment is Mr. C as the former Compliance Director of PT XYZ Life Insurance, even though he has left his position and no longer works in the insurance sector or other LJKs.

III. SCOPE OF REASSESSMENT

The implementation of reassessment of Key Parties is conducted at any time when, based on evidence, data, and/or information obtained from indirect supervision (off-site supervision), direct supervision (on-site supervision), and/or other information, there are indications of involvement and/or responsibility for:
a. integrity and/or financial feasibility issues in Controlling Key Parties; or b. integrity, financial reputation, and/or competence issues in Executive Key Parties and/or Official Key Parties of LJKNB.
Integrity and/or financial feasibility issues for Controlling Key Parties as referred to in item 1 letter a are issues related to:
a. actions, whether direct or indirect, involving influencing and/or ordering Executive Key Parties, Official Key Parties, and/or employees of LJKNB to hide and/or obscure violations of certain provisions or actual financial conditions and/or transactions, including:
1. false recording and/or fictitious transactions, whether on the asset or liability side of LJKNB, including transactions in administrative accounts;
2. setting unreasonable actuarial assumptions;
3. embezzlement or manipulation;
4. incorrect bookkeeping and/or financial reporting practices of LJKNB;
5. hacking of LJKNB information system technology; and
6. hiding, destroying, and/or eliminating bookkeeping records and/or transaction supporting documents or bookkeeping records of LJKNB;
  b. actions, whether direct or indirect, involving influencing and/or ordering Executive Key Parties, Official Key Parties, and/or employees of LJKNB to provide unfair benefits to shareholders, Key Parties, employees of LJKNB, and/or other parties that can harm or reduce the profits of LJKNB, including:
7. sale and/or purchase of assets, including assets in the form of investment instruments owned by LJKNB, at prices that are unreasonable compared to market prices;
8. provision of facilities and/or salaries that do not comply with statutory regulations and/or are unreasonable to members of the Board of Commissioners, members of the Board of Directors, members of the Sharia Supervisory Board, employees, and/or other parties;
9. provision of premium rates to policyholders or financing interest rates to debtors that are unreasonable;
10. provision of loan interest rates received or coupons on issued securities to creditors that are unreasonable;
11. approval of insurance claims or guarantees with unreasonable procedures and values;
12. provision of commissions to other parties that are unreasonable in relation to the conduct of business activities;
13. receipt of fees that are unreasonable in relation to the conduct of business activities; and
14. actions that exploit LJKNB to finance personal interests and/or business group interests illegally;
  c. actions, whether direct or indirect, involving influencing and/or ordering Executive Key Parties, Official Key Parties, and/or employees of LJKNB to commit acts violating prudential principles in the financial services sector and/or good management principles of LJKNB, including:
15. unhealthy debt and/or liability management practices;
16. marketing products and/or conducting activities that have not received approval from the Financial Services Authority;
17. purchase or disposal of assets, including assets in the form of investment instruments, without paying attention to prudential principles and risk management;
18. provision of funds to parties, sectors, and/or activities prohibited by statutory regulations; and
19. insurance closure, financing distribution, and/or guarantee acceptance not conducted with procedures that pay attention to the application of prudential principles and risk management;
  d. actions, whether direct or indirect, involving influencing and/or ordering Executive Key Parties, Official Key Parties, and/or employees of LJKNB conducting business activities based on Sharia principles to commit acts violating Sharia principles in the Sharia financial services sector, including:
20. implementation of business activities not in accordance with Sharia principles;
21. use of contracts not in accordance with fatwas from the National Sharia Board of the Indonesian Ulema Council; and
22. placement of assets in investment instruments not in accordance with Sharia principles;
  e. proven to have committed criminal offenses that have been decided by the court and have permanent legal force, namely:
23. criminal offenses in the financial services sector;
24. criminal offenses, namely criminal offenses listed in the Criminal Code (KUHP) and/or similar to the KUHP abroad with a threat of imprisonment of 1 (one) year or more; and/or
25. other criminal offenses with a threat of imprisonment of 1 (one) year or more, including corruption, money laundering, narcotics/psychotropics, smuggling, customs, excise, human trafficking, illegal arms trafficking, terrorism, counterfeiting money, in the field of taxation, in the field of forestry, in the field of the environment, in the field of marine, and fisheries;
  f. causing LJKNB to experience difficulties that endanger the continuity of LJKNB's business and/or can endanger the financial services industry, including actions violating statutory regulations that can cause LJKNB's business activities to be frozen and/or business licenses to be revoked; g. not implementing orders from the Financial Services Authority to perform and/or not perform certain actions; h. having non-performing loans and/or financing at LJK and/or being a controller, member of the board of directors, member of the board of commissioners, or equivalent of a company that has non-performing loans and/or financing, excluding non-performing loans and/or financing arising from annual fees, administrative costs, and/or other charges not arising from credit card usage transactions;
  i. proven to be declared bankrupt and/or being a shareholder, member of the board of directors, member of the board of commissioners, or equivalent, who is declared guilty of causing a company to be declared bankrupt or have its business license revoked;
  j. not taking necessary measures when LJKNB faces capital and/or liquidity difficulties, including:
26. not taking steps to increase capital deposits; and
27. not taking steps to find new investors; and/or
  k. refusing to provide commitments and/or not fulfilling commitments agreed upon with the Financial Services Authority and/or the government, such as commitments that have been agreed upon to be fulfilled by LJKNB as stated in the results report of direct examinations of LJKNB.
Integrity, financial reputation, and/or competence issues for Executive Key Parties and/or Official Key Parties as referred to in item 1 letter b are issues related to:
a. actions, whether direct or indirect, involving hiding and/or obscuring violations of certain provisions or actual financial conditions and/or transactions, including:
1. false recording and/or fictitious transactions, whether on the asset or liability side of LJKNB, including transactions in administrative accounts;
2. setting unreasonable actuarial assumptions;
3. embezzlement or manipulation;
4. incorrect bookkeeping and/or financial reporting practices of LJKNB;
5. hacking of LJKNB information system technology; and
6. hiding, destroying, and/or eliminating bookkeeping records and/or transaction supporting documents or bookkeeping records of LJKNB;
  b. actions, whether direct or indirect, involving providing unfair benefits to shareholders, Key Parties, employees of LJKNB, and/or other parties that can harm or reduce the profits of LJKNB, including:
7. sale and/or purchase of assets, including assets in the form of investment instruments owned by LJKNB, at prices that are unreasonable compared to market prices;
8. provision of facilities and/or salaries that do not comply with statutory regulations and/or are unreasonable to members of the Board of Commissioners, members of the Board of Directors, members of the Sharia Supervisory Board, employees, and/or other parties;
9. provision of premium rates to policyholders or financing interest rates to debtors that are unreasonable;
10. provision of loan interest rates received or coupons on issued securities to creditors that are unreasonable;
11. approval of insurance claims or guarantees with unreasonable procedures and values;
12. provision of commissions to other parties that are unreasonable in relation to the conduct of business activities;
13. receipt of fees that are unreasonable in relation to the conduct of business activities; and
14. actions that exploit LJKNB to finance personal interests and/or business group interests illegally;
  c. actions, whether direct or indirect, involving committing acts violating prudential principles in the field of LJKNB and/or good management principles of LJKNB, including:
15. unhealthy debt and/or liability management practices;
16. marketing products and/or conducting activities that have not received approval from the Financial Services Authority;
17. purchase or disposal of assets, including assets in the form of investment instruments, without paying attention to prudential principles and risk management;
18. provision of funds to parties, sectors, and/or activities prohibited by statutory regulations; and
19. insurance closure, financing distribution, and/or guarantee acceptance not conducted with procedures that pay attention to the application of prudential principles and risk management;
  d. actions, whether direct or indirect, involving committing acts violating Sharia principles for LJKNB conducting all or part of its business activities based on Sharia principles, including:
20. implementation of business activities not in accordance with Sharia principles;
21. use of contracts not in accordance with fatwas from the National Sharia Board of the Indonesian Ulema Council; and
22. placement of assets in investment instruments not in accordance with Sharia principles;
  e. proven to have committed criminal offenses that have been decided by the court and have permanent legal force, namely:
23. criminal offenses in the financial services sector;
24. criminal offenses, namely criminal offenses listed in the Criminal Code (KUHP) and/or similar to the KUHP abroad with a threat of imprisonment of 1 (one) year or more; and/or
25. other criminal offenses with a threat of imprisonment of 1 (one) year or more, including corruption, money laundering, narcotics/psychotropics, smuggling, customs, excise, human trafficking, illegal arms trafficking, terrorism, counterfeiting money, in the field of taxation, in the field of forestry, in the field of the environment, in the field of marine, and fisheries;
  f. causing LJKNB to experience difficulties that endanger the continuity of LJKNB's business and/or can endanger the financial services industry, including actions violating statutory regulations that can cause LJKNB's business activities to be frozen and/or business licenses to be revoked; g. not implementing orders from the Financial Services Authority to perform and/or not perform certain actions; h. having non-performing loans and/or financing at LJK and/or being a controller, member of the board of directors, member of the board of commissioners, or equivalent of a company that has non-performing loans and/or financing, excluding non-performing loans and/or financing arising from annual fees, administrative costs, and/or other charges not arising from credit card usage transactions;
  i. proven to be declared bankrupt and/or being a shareholder, member of the board of directors, member of the board of commissioners, or equivalent, who is declared guilty of causing a company to be declared bankrupt or have its business license revoked;
  j. not conducting strategic management in order to develop a healthy LJKNB, including the ability to interpret the vision and mission of LJKNB, anticipate economic and financial services sector developments, analyze the LJKNB industry situation and related industry sectors directly related to the business activities of LJKNB; and k. refusing to provide commitments and/or not fulfilling commitments agreed upon with the Financial Services Authority and/or the government, such as commitments that have been agreed upon to be fulfilled by LJKNB as stated in the results report of direct examinations of LJKNB.

IV. PROCEDURES FOR REASSESSMENT

The Financial Services Authority conducts reassessment with the following steps:
a. clarification of evidence, data, and/or information to the Key Party being reassessed; b. determination and transmission of the preliminary results of the reassessment to the Key Party being reassessed;
c. response from the Key Party being reassessed to the preliminary results of the reassessment; and
d. determination and notification of the final results of the reassessment to the Key Party being reassessed.
The Financial Services Authority transmits a letter requesting clarification of evidence, data, and/or information as referred to in item 1 letter a to the Key Party being reassessed.
For Key Parties who no longer own, manage, supervise, and/or have influence on LJKNB at the time the reassessment is conducted, notification for the request for clarification can be done by correspondence through contactable parties and/or summons through mass media.
The Key Party being reassessed is given the opportunity to submit a response to the request for clarification of evidence, data, and/or information as referred to in item 1 letter a, at the latest 10 (ten) working days calculated from the date of the written request for clarification from the Financial Services Authority.
The Financial Services Authority may summon the Key Party to undergo an interview process in the framework of implementing clarification of evidence, data, and/or information, which is conducted within a maximum period of 10 (ten) working days calculated from the date of the written request for clarification from the Financial Services Authority.
In the event that the Key Party being reassessed does not exercise the right to submit clarification of evidence, data, and/or information, including during the interview as referred to in item 5, the Financial Services Authority conducts the determination and submission of the preliminary reassessment results to the Key Party being reassessed.
Based on the results of the clarification of evidence, data, and/or information, the Financial Services Authority conducts the determination and submission of the preliminary reassessment results to the Key Party being reassessed.
The Key Party being reassessed is given the opportunity to submit responses to the preliminary reassessment results as referred to in item 6 or item 7, at the latest 10 (ten) working days calculated from the date of the Financial Services Authority's letter.
In the event that the Key Party being reassessed does not exercise the right to submit responses to the preliminary reassessment results within the established timeframe as referred to in item 8, the Financial Services Authority determines the preliminary reassessment results to become the final reassessment results.
In the event that the Financial Services Authority obtains new evidence, data, and/or information before the determination and notification of the final reassessment results as referred to in item 1 letter d, the Financial Services Authority determines the final reassessment results by considering the new evidence, data, and/or information obtained.
The determination of the final reassessment results as referred to in item 9 or item 10 is carried out while still referring to the process as referred to in item 1 letter a to letter c.
The determination of the final reassessment results is based on the level of involvement and/or responsibility of the Key Party being reassessed, which is categorized into:
a. actor; or b. assisting actor.
The term "actor" as referred to in item 12 letter a is:
a. a person who orders, instructs to do, or proposes the occurrence of an act; b. a person who approves, participates in approving, or signs;
c. a person who performs or participates in performing an act based on orders, with or without pressure, and who should know or should suspect that the order violates regulations, including:
1) a person who executes a proposal/order in the form of providing analysis/recommendation support regarding the occurrence of an act/decision and who should know or should suspect that the proposal/order violates regulations and does not attempt to refuse to perform the act or order; and
2) a person who executes a decision and who should know or should suspect that the decision violates regulations and does not attempt to refuse to perform the act or order; and/or
d. a person who performs an act due to a specific promise or reward.
The term "assisting actor" as referred to in item 12 letter b is a person who, in carrying out duties, positions, and/or due to an order from another party, with or without pressure, performs or participates in performing an act, and who should know or should suspect that the act or order performed violates regulations, but who has attempted to refuse to perform the act or order, proven by supporting documents and/or who has reported the act or order to the relevant work unit handling violations of regulations.

V. FINAL REASSESSMENT RESULTS

The Financial Services Authority determines the final reassessment results for Key Parties with the following predicates:
a. pass; or b. fail.
Parties categorized as assisting actors may be determined to have a "pass" predicate if they submit a letter of commitment containing a commitment not to repeat violation actions in the future.
Violations of the commitment as referred to in item 2 may serve as the basis for a reassessment of the relevant party.
The Financial Services Authority notifies the final reassessment results of Key Parties in writing to the Controlling Key Party, Non-Bank Financial Service Institution, the Key Party being reassessed, and other interested parties.

VI. CONSEQUENCES OF FINAL REASSESSMENT RESULTS

Key Parties determined with a "pass" predicate meet the requirements to remain as PSP, Controlling Party of an Insurance Company, members of the Board of Directors, executives of Pension Funds of Financial Institutions, members of the Board of Commissioners, members of the Sharia Supervisory Board, Internal Auditors, or Actuaries of Insurance Companies.
Controlling Key Parties determined with a "fail" predicate due to:
a. integrity issues, are prohibited from becoming:
1) Controlling Key Parties or holding shares in Financial Institutions; and/or
2) Executive Key Parties and/or Official Key Parties at Financial Institutions.
b. financial viability issues, are prohibited from becoming:
1) Controlling Key Parties or holding shares in the non-bank financial service industry where the Key Party undergoes reassessment, for example, a PSP at PT XYZ Multifinance determined to fail the reassessment due to financial viability issues, is prohibited from becoming a PSP at any financing company; and/or
2) Executive Key Parties and/or Official Key Parties in the non-bank financial service industry where the Key Party undergoes reassessment, for example, an individual PSP at PT XYZ Multifinance determined to fail the reassessment due to financial reputation issues, is prohibited from becoming a member of the Board of Directors, member of the Board of Commissioners, and/or member of the Sharia Supervisory Board at any financing company.
Executive Key Parties or Official Key Parties determined with a "fail" predicate due to:
a. integrity issues, are prohibited from becoming:
1) Controlling Key Parties or holding shares in Financial Institutions; and/or
2) Executive Key Parties and/or Official Key Parties at Financial Institutions.
b. financial reputation issues, are prohibited from becoming:
1) Controlling Key Parties or holding shares in the non-bank financial service industry where the Key Party undergoes reassessment; and/or
2) Executive Key Parties and/or Official Key Parties in the non-bank financial service industry where the Key Party undergoes reassessment.
c. competence issues, are prohibited from becoming Executive Key Parties and/or Official Key Parties in the non-bank financial service industry where the Key Party undergoes reassessment.
The imposition of prohibition periods on the parties as referred to in item 2 and item 3 is in accordance with the provisions as referred to in Article 11 of Financial Services Authority Regulation Number 34/POJK.03/2018 concerning Reassessment of Key Parties of Financial Service Institutions, with details as contained in the Appendix which is an inseparable part of this Financial Services Authority Circular.
Non-Bank Financial Service Institutions are required to follow up on the dismissal of Executive Key Parties or Official Key Parties within a maximum period of 3 (three) months from the date of notification from the Financial Services Authority, consisting of:
a. convening an Annual General Meeting of Shareholders to dismiss (ratify) the Executive Key Party determined with a "fail" predicate; or b. issuing a dismissal decision letter for the Official Key Party determined with a "fail" predicate.
Non-Bank Financial Service Institutions are required to report the follow-up as referred to in item 5 to the Financial Services Authority within a maximum period of 10 (ten) working days from:
a. the date of the dismissal Annual General Meeting of Shareholders for the Executive Key Party; or b. the date of the dismissal decision letter for the Official Key Party.
PSPs or Controlling Parties of Insurance Companies who are shareholders determined with a "fail" predicate are required to transfer all share ownership in:
a. Financial Institutions in the event that the PSP or Controlling Party of an Insurance Company is determined to fail due to integrity factors; or b. Non-Bank Financial Service Institutions where the Key Party undergoes reassessment, in the event that the PSP or Controlling Party of an Insurance Company is determined to fail due to financial viability factors, within a maximum period of 1 (one) year from the date the "fail" predicate is determined by the Financial Services Authority.
The Financial Services Authority may determine the timeframe for the share transfer obligation as referred to in item 7 separately in the event that:
a. in the Financial Services Authority's assessment, the aforementioned step needs to be adjusted to the rehabilitation program of the Non-Bank Financial Service Institution as regulated in regulations and/or policies in the financial service sector; and/or b. the PSP or Controlling Party of an Insurance Company who is a shareholder is obligated to transfer all share ownership in more than 1 (one) Financial Institution.
The rights of Controlling Key Parties regarding dividend distribution from Non-Bank Financial Service Institutions in the form of limited liability companies, the following provisions apply:
a. Controlling Key Parties still have the right to dividend payments for a maximum period of 1 (one) year calculated from the date the "fail" predicate is determined by the Financial Services Authority. b. In the event that the timeframe as referred to in letter a has expired and the Controlling Key Party has not transferred all share ownership as referred to in item 7 or item 8, the right to dividend payments is suspended until the relevant party transfers all their share ownership in accordance with regulations and procedures as referred to in Financial Services Authority Regulation Number 34/POJK.03/2018 concerning Reassessment of Key Parties of Financial Service Institutions.

VII. REQUEST FOR JUDICIAL REVIEW

Key Parties determined with a "fail" predicate may submit a request for judicial review regarding the "fail" predicate before the consequence timeframe expires.
The request for judicial review as referred to in item 1 may be submitted if it meets the following criteria:
a. there is new evidence, data, and/or information regarding the absence, or failure to submit clarification or response during the reassessment; b. there is a final and binding court decision stating that the party determined with a "fail" predicate as referred to in item 1 is not proven to have committed a criminal offense or is not proven to be declared bankrupt and/or as a shareholder, board member, or board of commissioners member, or equivalent, who is declared guilty causing a company to be declared bankrupt or have its business license revoked;
c. as a consequence of the implementation of the Law of the Republic of Indonesia; and/or
d. having served ¾ (three-quarters) of the consequence timeframe, and the Key Party:
1) has no negative records during the period of being declared "fail"; and
2) is committed to contributing significantly to the strengthening or rescue of the non-bank financial service industry, realized within the timeframe established by the Financial Services Authority.
New evidence, data, and/or information regarding absence, or failure to submit clarification or response as referred to in item 2 letter a must include strong and relevant reasons or considerations regarding the evidence of absence or failure to submit clarification or response, including:
a. illness that prevents the party being reassessed from functioning normally; and b. other reasons causing the party being reassessed unable to provide clarification or response within the timeframe established by the Financial Services Authority.
The term "consequence of the implementation of the Law of the Republic of Indonesia" as referred to in item 2 letter c includes, among others, the implementation of the Law of the Republic of Indonesia Number 11 Year 2016 concerning Tax Amnesty.
The term "having no negative records" as referred to in item 2 letter d item 1) means not committing legal violations with the threat of imprisonment/penalty of more than 1 (one) year, not causing bankruptcy, and/or becoming a shareholder, board member, or board of commissioners member, or equivalent, who is declared guilty causing a company to be declared bankrupt or have its business license revoked.
The commitment to contribute significantly to the strengthening or rescue of the Non-Bank Financial Service Industry as referred to in item 2 letter d item 2) is stated, among others, in written documents containing action plans with specific timeframes to be realized or the provision of funds in the form of an escrow account.
The request for judicial review as referred to in item 1 must be accompanied by the following documents:
a. identity documents, at least consisting of:
1) photocopy of the electronic identity card;
2) curriculum vitae;
3) recent 4x6 cm photograph; and
4) photocopy of the tax identification number (NPWP);
b. photocopy of the final reassessment results decision for the Key Party stating that the applicant failed;
c. evidence documents according to the criteria for the request for judicial review, including:
1) new evidence, data, and/or information regarding absence or failure to submit clarification or response during the reassessment, such as an official letter from the hospital where the applicant was treated;
2) copy of the final and binding court decision stating that the applicant is not proven to have committed a criminal offense or is not proven to be declared bankrupt and/or as a shareholder, board member, or board of commissioners member, or equivalent, who is declared guilty causing a company to be declared bankrupt or have its business license revoked; and
3) official and valid evidence of the consequence of the implementation of the law;
d. evidence of having no negative records during the period of being declared "fail", including:
1) a stamped statement letter stating that the applicant:
a) is not proven to be declared bankrupt and/or as a shareholder, board member, or board of commissioners member, or equivalent, who is declared guilty causing a company to be declared bankrupt or have its business license revoked; and b) has never been sentenced for proven legal violations with a threat of penalty of more than 1 (one) year; and
2) police record certificate; and
e. photocopy of deposit receipts at general banks or Sharia general banks in Indonesia under the name "Board of Commissioners of the Financial Services Authority qq. applicant name" with the note that the withdrawal of the deposit can only be done after obtaining approval from the Financial Services Authority.
If necessary, the Financial Services Authority has the authority to request other supporting documents and/or information related to the request for judicial review documents as referred to in item 7.
The Financial Services Authority grants approval or rejection of the request for judicial review submitted by Key Parties determined with a "fail" predicate based on:
a. examination of the completeness and truthfulness of documents; b. analysis of the judicial review documents; and
c. other considerations, such as the impact on the condition of the Non-Bank Financial Service Institution both individually and industrially.
In the event that based on the analysis results it is found that there is a mismatch of the request for judicial review criteria and/or the submitted documents are incomplete, the Financial Services Authority notifies the applicant that the request for judicial review is rejected.
The applicant may submit a request for judicial review again if the request for judicial review criteria are met and/or the documents held are complete.
In the event that the criteria are met, the request for judicial review approved by the Financial Services Authority is carried out with the following steps:
a. clarification of evidence, data, and/or information to the Key Party submitting the request for judicial review; b. determination and submission of the preliminary judicial review results to the Key Party submitting the request for judicial review;
c. response from the Key Party submitting the request for judicial review regarding the preliminary judicial review results; and
d. determination and notification of the final judicial review results to the Key Party submitting the request for judicial review.
Key Parties declared to pass in the judicial review process may become Key Parties through the suitability and propriety assessment process referring to Financial Services Authority Regulations governing the suitability and propriety assessment for key parties of financial service institutions.

VIII. REPORT ON UPDATING KEY PARTY DOMICILE DATA AND INFORMATION

Non-Bank Financial Service Institutions are required to submit reports on updating domicile data and information of Key Parties and/or contactable parties in accordance with the provisions in Article 17 of Financial Services Authority Regulation Number 34/POJK.03/2018 concerning Reassessment of Key Parties of Financial Service Institutions.
In the event of changes to domicile data and information as referred to in item 1, Non-Bank Financial Service Institutions submit data and information to the Financial Services Authority at any time.
The submission of reports on updating domicile data and information of Key Parties as referred to in item 1 is submitted online through the Financial Services Authority's data communication network system.
In the event that the Financial Services Authority's data communication network system as referred to in item 3 is not yet available or experiences technical disturbances, the submission of reports on updating domicile data and information of Key Parties as referred to in item 1 is submitted to the Financial Services Authority offline via email to offsijingga@ojk.go.id.
In the event of technical disturbances as referred to in item 4, the Financial Services Authority announces via the Financial Services Authority website and/or sends an email to the person in charge (PIC) of the Non-Bank Financial Service Institution.

IX. DELIVERY ADDRESS

Submission of clarifications, statement letters, and/or responses from Key Parties being assessed in the reassessment process is submitted to:
a. For insurance companies, reinsurance companies, Pension Funds, Financing Companies, Venture Capital Companies, Guarantee Institutions, or Pawnshops:
Directorate of Non-Bank Financial Institutions and Products I, Financial Services Authority Wisma Mulia 2 Building, 11th Floor Jalan Jenderal Gatot Subroto Number 42, South Jakarta, 12710; b. For insurance brokers, reinsurance brokers, and insurance loss adjusters:
Directorate of Non-Bank Financial Institutions Supporting Services I, Financial Services Authority, Wisma Mulia 2 Building, 12th Floor Jalan Jenderal Gatot Subroto Number 42, South Jakarta, 12710;
c. For Non-Bank Financial Service Institutions conducting business activities based on Sharia principles:
Directorate of Sharia Non-Bank Financial Institutions, Financial Services Authority, Wisma Mulia 2 Building, 15th Floor Jalan Jenderal Gatot Subroto Number 42, South Jakarta, 12710, with copies to the relevant supervision directorate where the Key Party undergoes reassessment.
In the event of changes to the Financial Services Authority's office address, the delivery address is in accordance with the information provided on the official Financial Services Authority website.

X. OTHER PROVISIONS

The final reassessment results of Key Parties of Non-Bank Financial Service Institutions are confidential.
The final reassessment results of Key Parties of Non-Bank Financial Service Institutions are accounted for and used by the Financial Services Authority in carrying out regulatory and supervisory tasks regarding Non-Bank Financial Service Institutions.
In the event that Non-Bank Financial Service Institutions and Key Parties being tested notify the final reassessment results to other parties, then all legal consequences arising are the full responsibility of the relevant party.

This copy is in accordance with the original
Deputy Director of Legal Consultation and
Banking Regulation Harmonization 1 as Acting Director of Law 1 Legal Department signed Wiwit Puspasari

XI. TRANSITIONAL PROVISIONS

For every implementation of reassessment against Key Parties that have been processed before the establishment of this Financial Services Authority Circular, then:

The processing may still continue based on the provisions as referred to in Financial Services Authority Regulation Number 4/POJK.05/2013 concerning Suitability and Propriety Assessment for Key Parties in Insurance Companies, Pension Funds, Financing Companies, and Guarantee Companies, along with its implementing regulations as long as they do not conflict with Financial Services Authority Regulation Number 34/POJK.03/2018 concerning Reassessment of Key Parties of Financial Service Institutions; and
The consequences of the reassessment results refer to the provisions in Financial Services Authority Regulation Number 34/POJK.03/2018 concerning Reassessment of Key Parties of Financial Service Institutions.

XII. CLOSING

The provisions in this Financial Services Authority Circular take effect on the date of establishment.

Established in Jakarta on July 22, 2019
EXECUTIVE HEAD OF SUPERVISOR
FOR INSURANCE, PENSION FUNDS,
FINANCING INSTITUTIONS, AND
OTHER FINANCIAL SERVICE INSTITUTIONS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA,

signed

RISWINANDI

APPENDIX
FINANCIAL SERVICES AUTHORITY CIRCULAR
NUMBER 15 /SEOJK.05/2019
CONCERNING
REASSESSMENT OF KEY PARTIES
OF NON-BANK FINANCIAL SERVICE INSTITUTIONS

SANCTION TIMEFRAMES FOR CONTROLLING KEY PARTIES DETERMINED TO FAIL

No.	Controlling Key Party Determined to Fail Due to Proven Actions/Acts	Sanction Timeframe
1.	Influencing and/or instructing Executive Key Parties, Official Key Parties, and/or Non-Bank Financial Service Institution employees to perform acts violating prudence principles in the financial service sector and/or good management principles of Non-Bank Financial Service Institutions.	3 (three) years<br>Becomes 5 (five) years if:<br>a. the act/action is repeated;<br>b. also performs acts/actions in number 2, number 3, number 4, number 5, and/or number 6 cumulatively; and/or<br>c. proven to benefit oneself or others.
2.	Proven not to execute Financial Services Authority orders to perform and/or not perform specific actions.	3 (three) years<br>Becomes 5 (five) years if:<br>a. the act/action is repeated;<br>b. also performs acts/actions in number 1, number 3, number 4, number 5, and/or number 6 cumulatively; and/or<br>c. the act/action is accompanied by benefiting oneself or others.
3.	Having non-performing loans and/or financing at Financial Institutions and/or becoming a controlling party, board member, board of commissioners member, or equivalent of a company having non-performing loans and/or financing.	3 (three) years<br>Becomes 5 (five) years if:<br>a. the act/action is repeated;<br>b. also performs acts/actions in number 1, number 2, number 4, number 5, and/or number 6 cumulatively; and/or<br>c. the act/action is accompanied by benefiting oneself or others.

No.
Principal Controller Deemed Unfit Due to Proven Acts/Misconduct Sanction Duration

Failing to take necessary measures when the Non-Bank Financial Service Institution (LJKNB) faces capital and/or liquidity difficulties.
3 (three) years
Becomes 5 (five) years if:
a. the act/misconduct is committed repeatedly; b. also committing acts/misconduct in numbers 1, 2, 3, 5, and/or 6 cumulatively; and/or
c. the act/misconduct is committed accompanied by benefiting oneself or other parties.
Refusing to provide commitments and/or not fulfilling commitments agreed upon with the Financial Services Authority (OJK) and/or the Government.
3 (three) years
Becomes 5 (five) years if:
a. the act/misconduct is committed repeatedly; b. also committing acts/misconduct in numbers 1, 2, 3, 4, and/or 6 cumulatively; and/or
c. the act/misconduct is committed accompanied by benefiting oneself or other parties.
Influencing and/or ordering Managerial Principals, Official Principals, and/or LJKNB employees conducting business activities based on Sharia principles to commit acts violating Sharia principles in the Sharia financial services sector.
3 (three) years
Becomes 5 (five) years if:
a. the act/misconduct is committed repeatedly; b. also committing acts/misconduct in numbers 1, 2, 3, 4, and/or 5 cumulatively; and/or
c. the act/misconduct is committed accompanied by benefiting oneself or other parties.
Influencing and/or ordering Managerial Principals, Official Principals, and/or LJKNB employees to conceal and/or obscure violations of certain provisions or financial conditions and/or actual transactions.
5 (five) years
Influencing and/or ordering Managerial Principals, Official Principals, and/or LJKNB employees to provide undue benefits to shareholders, Principals, LJKNB employees, and/or other parties that can harm or reduce LJKNB profits.
5 (five) years
Proven to have committed a criminal offense that has been decided by a court and has permanent legal force as referred to in the Financial Services Authority Regulation regarding the assessment of competence and propriety for principals of financial service institutions.
20 (twenty) years
Causing the LJKNB to experience difficulties that endanger the continuity of the LJKNB's business and/or can endanger the financial services industry.
20 (twenty) years
Proven to be declared bankrupt and/or become a shareholder, member of the board of directors, member of the board of commissioners, or equivalent, who is declared guilty of causing a company to be declared bankrupt or have its business license revoked.
20 (twenty) years

SANCTION DURATION FOR MANAGERIAL PRINCIPALS OR OFFICIAL PRINCIPALS DEEMED UNFIT

No.
Managerial Principal/Official Principal Deemed Unfit Due to Proven Acts/Misconduct Sanction Duration

Violating prudential principles in the financial services sector and/or good LJKNB management principles.
3 (three) years
Becomes 5 (five) years if:
a. the act/misconduct is committed repeatedly; b. also committing acts/misconduct in numbers 2, 3, 4, 5, and/or 6 cumulatively; and/or
c. proven to benefit oneself or other parties.
Proven not to have executed the Financial Services Authority's orders to perform and/or not perform specific actions.
3 (three) years
Becomes 5 (five) years if:
a. the act/misconduct is committed repeatedly; b. also committing acts/misconduct in numbers 1, 3, 4, 5, and/or 6 cumulatively; and/or
c. the act/misconduct is committed accompanied by benefiting oneself or other parties.
Having non-performing loans and/or financing at Financial Service Institutions (LJK) and/or becoming a controller, member of the board of directors, member of the board of commissioners, or equivalent of a company that has non-performing loans and/or financing.
3 (three) years
Becomes 5 (five) years if:
a. the act/misconduct is committed repeatedly; b. also committing acts/misconduct in numbers 1, 2, 4, 5, and/or 6 cumulatively; and/or
c. the act/misconduct is committed accompanied by benefiting oneself or other parties.
Failing to perform strategic management in the context of developing a healthy LJKNB.
3 (three) years
Becomes 5 (five) years if:
a. the act/misconduct is committed repeatedly; b. also committing acts/misconduct in numbers 1, 2, 3, 5, and/or 6 cumulatively; and/or
c. the act/misconduct is committed accompanied by benefiting oneself or other parties.
Refusing to provide commitments and/or not fulfilling commitments agreed upon with the Financial Services Authority (OJK) and/or the Government.
3 (three) years
Becomes 5 (five) years if:
a. the act/misconduct is committed repeatedly; b. also committing acts/misconduct in numbers 1, 2, 3, 4, and/or 6 cumulatively; and/or
c. the act/misconduct is committed accompanied by benefiting oneself or other parties.
Violating Sharia principles in the Sharia financial services sector.
3 (three) years
Becomes 5 (five) years if:
a. the act/misconduct is committed repeatedly; b. also committing acts/misconduct in numbers 1, 2, 3, 4, and/or 5 cumulatively; and/or
c. the act/misconduct is committed accompanied by benefiting oneself or other parties.
Concealing and/or obscuring violations of certain provisions or financial conditions and/or actual transactions.
5 (five) years
Providing undue benefits to shareholders, Principals, LJKNB employees, and/or other parties that can harm or reduce LJKNB profits.
5 (five) years
Proven to have committed a criminal offense that has been decided by a court and has permanent legal force as referred to in the Financial Services Authority Regulation regarding the assessment of competence and propriety for principals of financial service institutions.
20 (twenty) years
Causing the LJKNB to experience difficulties that endanger the continuity of the LJKNB's business and/or can endanger the financial services industry.
20 (twenty) years
Proven to be declared bankrupt and/or become a member of the board of directors, member of the board of commissioners, or equivalent, who is declared guilty of causing a company to be declared bankrupt or have its business license revoked.
20 (twenty) years

This copy is consistent with the original
Deputy Director of Legal Consultation and Harmonization of Banking Regulations 1 as Acting Director of Legal Affairs 1 Legal Department signed Wiwit Puspasari

Issued in Jakarta on 22 July 2019
EXECUTIVE HEAD OF INSURANCE, PENSION FUND,
FINANCING INSTITUTION, AND OTHER
FINANCIAL SERVICE INSTITUTIONS SUPERVISOR
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
RISWINANDI

OJK Circular Letter No. 15/SEOJK.05/2019 Regarding Reassessment of Key Parties of Non-Bank Financial Service Institutions

Lineage: In force