Gratification control on financial services sector

Financial services is one of the most regulated sectors in Indonesia because of its complexity and risk exposure from certain aspects, such as cybersecurity and corruption. Apart from direct supervision by the Financial Services Authority or Otoritas Jasa Keuangan towards the business’ conduct, the Indonesian government wanted to protect and ensure the compliance of this sector by issuing the Gratification Control.

Based on KPK’s annual report, the private sector contributed 31 out of 109 suspects in corruption cases in 2020, while the other suspects are mainly members of the House of Representatives or Regional House of Representatives and other public officials. Such statistics show the significant corruption risk in the private sector.

Unlawful gratification

Indonesian Anti-Corruption Law provides that every gratification provided to state and/or public officials will be deemed as bribery if it relates to their position and contradicts their statutory duties. Violation of such provision will be subject to penal sanctions under Article 5 or Article 13 of the Anti-Corruption Law in the form of imprisonment ranging from a year up to five years and fines amounting from IDR50,000,000 (approx. US$3,475) up to IDR250,000,000 (approx. US$17,379).

The Gratification Control expressly provides that businesses within the financial services sector are prohibited from providing unlawful gratification in the form of fee marketing, collection fees, refunds, etc.

Prevention needed

The Gratification Control provides that certain preventative actions need to be taken by the business to ensure compliance with the prevailing laws and the absence of such preventative actions could subject the business to corporate criminal liability in the courts.

Enhanced internal policies and training in anti-bribery and anti-corruption principles in the workplace is needed as one of the preventative actions. Such actions are intended to preserve the compliance of a business’ conduct with the prevailing laws. In addition, such policies will be a mitigating factor should the business be liable to corporate criminal proceedings.

Authored by Chalid Heyder, Teguh Darmawan and Andera Rabbani.