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The Legality of Foreign Currency Exchange Service (Money Changer)

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The Legality of Foreign Currency Exchange Service (Money Changer)

The Legality of Foreign Currency Exchange Service (Money Changer)
Sovia Hasanah, S.H.Si Pokrol
Si Pokrol
Bacaan 10 Menit
The Legality of Foreign Currency Exchange Service (Money Changer)

PERTANYAAN

Can foreign currency exchange services by individuals be said as money changers? This person provides various foreign currencies like money changers in general, but this person does not have a business entity.

DAFTAR ISI

    INTISARI JAWABAN

    Money Changer is the organizer of Non-Bank Foreign Exchange Business Activities (Kegiatan Usaha Penukaran Valuta Asing/ “KUPVA”) i.e. an incorporated non-bank business entity as a Limited Liability Company (“LLC”) that conducts KUPVA.

    It is impossible to conduct foreign currency trading by individuals, this is because KUPVA business actors must be in the form of incorporated limited liability companies and must secure licenses/permits from Bank Indonesia in conducting sales and purchases of foreign banknotes (Uang Kertas Asing/ “UKA”).

    Please read the review below for a further explanation.

    ULASAN LENGKAP

    This article is an English translation of Legalitas Jasa Penukaran Uang Asing (Money Changer) which was written by Sovia Hasanah, S.H. and was published on Thursday, 19 January 2017.

    All legal informations which are available through Klinik hukumonline.com have been prepared for educational purposes only and are general in nature (read the complete Disclaimer). In order to obtain legal advice specific to your case, please consult with Justika Partner Consultant.

    Foreign Exchange Business Activities

    In order to answer your question, we will refer to the Regulation of Bank Indonesia Number 18/20/PBI/2016 of 2016 on Non-Bank Foreign Exchange Business Activities ("Regulation of BI 18/2016").

    Based on your statement, we assume that foreign currency exchange services are business activities of purchasing and selling foreign currencies which are conducted by individuals.

    Foreign Exchange Business Activities (Kegiatan Usaha Penukaran Valuta Asing/ "KUPVA"), is the selling and purchasing of Foreign Banknotes (Uang Kertas Asing/ "UKA"), as well as the purchase of Traveller's Check/Cheque.[1]

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    Traveller’s Cheques are travellers' checks/cheques in foreign currencies which may be used as means of payment.[2]

    Money Changer or Non-Bank Foreign Exchange Business Activities organizer is an incorporated non-bank business entity in the form of a Limited Liability Company (LLC) that conducts KUPVA.[3]

    KUPVA organizers may engage in the following business activities:[4]

    1. exchange activities conducted through the mechanism of buying and selling foreign banknotes;
    2. purchase of Traveller’s Cheques; and
    3. other business activities related to the implementation of KUPVA insofar as it has been regulated in Bank Indonesia provisions.

    Therefore, money changers are KUPVA organizers which are incorporated as LLCs.

    Obtaining Licenses

    Any non-bank business entities that intend to operate as Non-Bank KUPVA is first required to obtain a license from Bank Indonesia.[5] In addition, the Board of Directors (“BoD”), Board of Commissioners (“BoC”), and shareholders of non-bank KUPVA must first obtain approval from Bank Indonesia.[6]

    In order to obtain a license from Bank Indonesia, non-bank business entities must fulfill the following requirements:[7]

    1. Incorporated LLCs whose shares are wholly owned by:
    1. Indonesian citizen; and/or
    2. business entities whose shares are wholly owned by Indonesian Citizens;

     

    1. include in the articles of association (charter) of the company, that the purpose and objective of the company is to conduct the sales and purchases of foreign banknotes and Travellers’ Cheques purchases;
    2. meet the amount of paid-up capital determined by Bank Indonesia; and
    3. paid-up capital does not originate from and/or for money laundering purposes.

    Applications for licenses as Non-Bank KUPVA Organizers shall be submitted in writing by the BoD.[8]

    Based on the explanation, KUPVA business actors must be in the form of incorporated LLCs, and in conducting any transaction of purchasing and selling foreign banknotes, a license from Bank Indonesia must be obtained.

    Prohibition on Foreign Exchange Business Actors

    For information, Non-Bank KUPVA organizers are prohibited from:[9]

    1. acting as a Traveller's Cheques selling agent;
    2. conduct margin trading, spot, forward, swap, and other derivative transactions for the benefit of the Customers and the interest of the Non-Bank KUPVA Organizers;
    3. conduct sales and purchases transactions of foreign banknotes as well as the purchase of Travellers’ Cheques with Non-Bank KUPVA Organizers that do not have licenses from Bank Indonesia;
    4. conduct activities of organizing fund transfer; and
    5. conduct other business activities outside of the specified business activities.

    In addition to the prohibition as referred to above, Non-Bank KUPVA Organizers are prohibited from:[10]

    1. become the owner of an unlicensed KUPVA organizer;
    2. cooperate with unlicensed KUPVA organizers; and
    3. conduct business activities through unlicensed KUPVA organizers.

    Any business actors which does not have licenses from Bank Indonesia or who engage in any of the prohibited activities will be subject to administrative sanctions in the form of:[11]

    1. written reprimand;
    2. obligation to pay;
    3. cessation of business activities; and/or
    4. revocation of license.

    So, in answer to your question, it is prohibited to conduct foreign currency trading business individually (not incorporated) and therefore this must not be conducted. Foreign Exchange Business Activities must be undertaken by an LLC and obtain a license from Bank Indonesia.

    These are the answers we can provide, we hope you will find them useful.

    Legal Basis:

    1. Regulation of Bank Indonesia Number 18/20/PBI/2016 of 2016 on Non-Bank Foreign Exchange Business Activities.

    [1] Article 1 number 4 Regulation of Bank Indonesia Number 18/20/PBI/2016 of 2016 on Non-Bank Foreign Exchange Business Activities ("Regulation of BI 18/2016").

    [2] Article 1 number 2 Regulation of BI 18/2016.

    [3] Article 1 number 5 Regulation of BI 18/2016.

    [4] Article 2 section (1) and (2) Regulation of BI 18/2016.

    [5] Article 11 section (1) Regulation of BI 18/2016.

    [6] Article 11 section (2) Regulation of BI 18/2016.

    [7] Article 11 section (3) Regulation of BI 18/2016.

    [8] Article 11 section (4) Regulation of BI 18/2016.

    [9] Article 6 Regulation of BI 18/2016.

    [10] Article 7 section (1) Regulation of BI 18/2016.

    [11] Article 39 section (1) Regulation of BI 18/2016.

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