Indonesia Financial Services Authority sets out registration procedure for FinTech providers

25 June 2024

On 3 June 2024, the Indonesia Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) issued Circular No. 6/SEOJK.07/2024 on the Registration of Financial Technology Innovation Providers (“Circular”). The Circular implements OJK Regulation No. 3/2024 on the Implementation of Technological Innovation in the Financial Sector. OJK Regulation No. 3/2024 seeks to enhance OJK’s regulatory and supervisory roles in overseeing financial technology (“FinTech”) by implementing the prudential principle to uphold financial system stability, market integrity, and consumer protection, as stipulated in Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector. For more on OJK Regulation No. 3/2024, please see our article “Indonesia Financial Services Authority issues new regulation on FinTech”. 

The Circular came into effect on its issuance.

Application of Circular

The Circular applies to both prospective and current providers of FinTech innovation. The term “FinTech innovation” (“FI”) refers to technology-driven innovation that affects products, services, activities, and business models within the digital financial ecosystem. FI providers (“FIPs”) are any parties that offer FI.

The Circular covers key issues, including:

  • Application procedures and registration requirements;
  • Document verification and analysis processes, and the approval and rejection of applications to register as an FIP; and
  • Cancellation of registration.

Prospective FIPs applying for registration should be:

  • participants who pass OJK’s regulatory sandbox and are designated by OJK to apply for registration;
  • parties recommended by OJK to comply with registration requirements;
  • parties with the same FI type as those who have passed the sandbox; or
  • parties with the same FI type as those recommended for registration by OJK.

By way of background, the sandbox referred to above is set up pursuant to Circular No. 5/SEOJK.07/2024 on the Mechanism for the Testing and Development of Innovation which provides for a regulatory framework that allows small-scale testing of new FinTech products in a controlled environment under OJK supervision. The sandbox is set up to ensure that innovation and technological development in the financial sector are conducted responsibly with good risk management. Among other things, the sandbox allows participants to conduct trials within a limited period and environment, including for developing innovation in digital-based products, activities, services, and/or business models in the financial services sector. Participants may also consult with OJK on the sandbox processes.

Application procedures and registration requirements

The Circular sets out a comprehensive procedure for prospective FIPs to seek registration. The key steps are as follows:

  • Prospective FIPs must submit an application for registration to OJK using Form A, accompanied by a cover letter using Form B. All forms are appended to the Circular.
  • The application should include documents covering the following aspects:
    • Institutional and governance information, including a copy of the legal entity’s certificate of incorporation, information on the board of directors, board of commissioners, and shareholders, controlling shareholders, organisational structure, and business plan;
    • Business model information, including processes, product benefits, services and/or innovations offered (value proposition), target market and consumer profile, structure of income (revenues), fees charged to users, product output, and consumer protection procedures;
    • Information technology information, including the methodology and technology used in service delivery, evidence that data centres and disaster recovery centres are located in Indonesia, cooperation agreements with data centre and disaster recovery centre providers, policies and procedures for the protection of personal data;
    • Partnership information, including partnership plans, mapping of business processes supported by third parties, mapping of cooperation types and numbers with financial services operators, and memorandum of understanding or cooperation agreement with financial service operators (Pelaku Usaha Sektor Keuangan or “PSUK”). PSUK include financial services institutions, financial market infrastructure operators, payment system operators, financial sector support institutions, and other financial sector operators, both conventional and Shariah.

Applications for registration should be submitted via email to pendaftaraniakd@ojk.go.id.

OJK process after application

After completion of the registration process, OJK verifies and analyses the registration application documents and notifies the prospective FIPs to submit any missing documents within 30 days from the notification date. If prospective FIPs fail to complete the application, the application process cannot continue.

The OJK will approve or reject the registration application no later than 20 working days after receipt of a complete set of the required documentation. If the prospective FIP is successful in its application, OJK will issue a certificate of registration. FIPs that receive a certificate of registration must submit an application for registration as an electronic system provider to the relevant agency within 30 working days from the date of issuance of the certificate.

Cancellation of registration

OJK may cancel the registration of an FIP that has received a certificate of registration if the FIP:

  • violates laws and regulations;
  • is declared incapable of conducting business operations based on OJK’s supervision or for other reasons; or
  • applies for cancellation of the certificate of registration.

KBLI code

The Indonesia Standard Industrial Classification (Klasifikasi Baku Lapangan Usaha Indonesia or “KBLI”) is a system used to classify the economic activities in Indonesia into different business areas. All businesses must utilise the appropriate KBLI code. The KBLI code for FIPs is “64999 – Other Financial Service Activities not elsewhere classified, except insurance and pension funding activities.”