Authority of the Financial Services Authority in the Process of Criminal Investigations in the Financial Services Sector

Financial Services Authority

Introduction 

On 12 January 2023, the Government of Indonesia passed Law Number 4 of 2023 on the Development and Strengthening of the Financial Sector (“PPSK Law”). This PPSK Law is an Omnibus Law for the financial sector, because it amends, removes, and/or stipulates new arrangements for several provisions that have been regulated in several Laws in the financial sector, one of which is Law Number 21 of 2011 on the Financial Services Authority (“OJK Law”).

The Financial Services Authority or OJK is an independent agency established under the OJK Law as amended through the PPSK Law. One of the OJK’s authorities under the OJK Law and the PPSK Law is to conduct examinations and investigations into alleged criminal acts in the financial services sector. Furthermore, the OJK’s authority to conduct criminal examinations and investigations in the financial services sector is increasingly emphasized under Government Regulation Number 5 of 2023 on Criminal investigations in the Financial Services Sector (“GR 5/2023“).

Article 49 paragraph (5) of the OJK Law, as amended by the PPSK Law, stipulates that the process of criminal investigations in the financial services sector can only be conducted by OJK Investigators. With reference to Article 2 paragraph (2) of GR 5/2023 jo. Article 49 paragraph (1) of the OJK Law as amended by the PPSK Law, it has been stipulated that OJK Investigators consist of Investigators from the Indonesian National Police, Civil Servant Officials (PPNS), and certain employees at OJK who are authorized as investigators as referred to in the Criminal Procedure Code (“KUHAP”).

Authorities of OJK Investigators in GR 5/2023

With reference to Article 2 paragraph (4) of GR 5/2023, the authorities of OJK Investigators include receiving a report or complaint regarding a Criminal Act in the Financial Services Sector, conducting initial research on the veracity of the report, summoning, examining and requesting information and items of evidence from the party who allegedly or suspected of committing a crime in the financial sector, temporarily suspend a bank account or other financial institution belonging to a party suspected of committing a crime, and conducting inspections at places suspected of being the scene of a crime in the financial services sector.

The authorities possessed by OJK Investigators are essentially similar to those of Indonesian National Police Investigators as stipulated in KUHAP. However, a clear distinction between the authority of OJK Investigators and Indonesian National Police Investigators lies in the authority to take coercive measures in the form of arrests, detentions, searches and confiscations during the investigation process. With reference to Article 2 paragraph (4) letter g of GR 5/2023, OJK Investigators request assistance from the Indonesian National Police or other relevant agencies to conduct an arrest, detention, search and confiscation in cases of Criminal Acts in the financial services sector being handled. With reference to these provisions, it is known that coercive measures cannot be taken by OJK Investigators alone but with the assistance of the Indonesian National Police.

The assistance of the Indonesian National Police provided to the OJK Investigators in taking coercive measures is also a form of coordination and supervision by the Indonesian National Police over the process of criminal investigations in the financial services sector conducted by OJK Investigators. This is also in accordance with Article 6 of GR 5/2023 stipulating that the investigation process by OJK Investigators is under the coordination and supervision of the Indonesian National Police.

The coordination and supervision by the Indonesian National Police over OJK Investigators are also regulated in Articles 7, 8, 11 and 12 of GR 5/2023. With reference to these provisions, OJK Investigators cannot conduct independent criminal investigations in the Financial Services Sector, but they must coordinate with and be supervised by the Indonesian National Police. 

In addition to Article 2 of GR 5/2023, OJK’s authority in the process of criminal investigations in the financial services sector, namely determining when to commence, not to conduct, or to discontinue criminal investigations in the financial services sector, the determination of which must coordinate first with the Indonesian National Police, as regulated in Article 9 paragraph (1) of GR 5/2023.

Article 7 paragraph (1) of GR 5/2023 has mandated that the process of criminal investigations in the financial services sector by OJK Investigators is conducted by prioritizing the principles of restorative justice and ultimum remedium, which means that Criminal Acts in the financial services sector can be resolved by out of court settlement and imposing a criminal sanction is the last resort in the settlement process of Criminal Acts in the financial services sector.

Article 9 paragraph (3) of GR 5/2023 further stipulates that Suspects in Criminal Acts in the financial services sector can submit an application to the OJK for settlement of violations of laws and regulations in the financial services sector. The authority to decide on approving or rejecting the application for settlement of violations lies only with OJK as stipulated in Article 9 paragraphs (6) and (11) letter a of GR 5/2023. Furthermore, in evaluating the application for settlement of violations submitted by Suspects, in accordance with the provisions of Article 9 paragraph (5) of GR 5/2023, OJK considers at least: 

  1. whether or not there is settlement for losses arising from criminal acts;
  2. transaction value and/or loss value for violations; and
  3. impact on the financial services sector, financial service agency, and/or the interests of customers or investors, and/or the public.

If OJK approves the application for settlement of violations submitted, then under Article 9 paragraphs (6) and (7) of GR 5/2023, the examination process will discontinue provided that the Suspect has fulfilled all the points stated in the settlement agreement and paid compensation to the aggrieved party. However, if OJK rejects the application for settlement of violations or the Suspect fails to fulfill the points stated in the settlement agreement which have been approved, OJK has the authority to proceed to the investigation stage as stipulated in Article 9 paragraph (11) of GR 5/2023.

The investigation process by OJK Investigators as stipulated in Article 7 paragraph (3) of GR 5/2023 commences by sending a Notice of Commencement of Investigation (SPDP) by OJK Investigators to the Indonesian National Police to be forwarded to the Public Prosecutor. During the investigation process, OJK Investigators coordinate with the Indonesian National Police in conducting a case presentation to level up the investigation and to identify a Suspect.

If the investigation process discontinues, OJK Investigators are required to send a notice of discontinuance of investigation to the Indonesian National Police which is then forwarded to the Public Prosecutor. However, if the investigation process continues, OJK Investigators are required to send the case files as a result of the investigation to the Indonesian National Police Investigators to be forwarded to the public prosecutor in accordance with KUHAP.

Closing

In conducting criminal investigations in the financial services sector, the authorities of OJK Investigators are essentially similar to those of the Indonesian National Police Investigators as stipulated in KUHAP, but OJK Investigators are not allowed to take coercive measures because they do not have one or are granted with this authority. 

Furthermore, in carrying out their authority in the process of criminal investigations in the financial services sector, OJK Investigators are required to coordinate with and be supervised by the Indonesian National Police, hence OJK Investigators cannot conduct independent investigations.

References:

  • Law Number 4 of 2023 on Development and Strengthening of the Financial Sector
  • Government Regulation Number 5 of 2023 on Criminal investigations in the Financial Services Sector

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Picture of Mathias Bagas Pangestu
Mathias Bagas Pangestu
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