Author: Vania Aqilla Cahyaningrum with Felicia Cindy Hanubrata
“The Institutional aspect of a legal entity is a crucial prerequisite in obtaining PJP licensing from Bank Indonesia; thus, it necessitates a thorough examination for the correctness and completeness through Legal Due Diligence (LDD).”
Payment Service Providers (“PJP”) is stipulated in Bank Indonesia Regulation Number 23/6/PBI/2021 (“PBI 23/2021”). PJP are Bank or Non-Bank Institutions that provide services to facilitate payment transactions to service users.
PJP carry out activities that include:
a. provision of information on Source of Funds;
b. payment initiation and/or acquiring services;
c. administration of Fund Sources; and/or
d. remittance service.
PJP must obtain license from Bank Indonesia (“BI”). The party applying for a license to become a PJP must meet the licensing requirements set by BI that include the following aspects:
a. institutional;
b. capital and finance;
c. risk management; and
d. information system capabilities.
To ensure the correctness and completeness of the licensing requirements, the licensing prerequisite needs to be examined through Legal Due Diligence (“LDD”) and/or accompanied by a statement letter signed by the authorized Board of Directors stating that all the required licensing documents provided are correct and complete as the current company’s condition.
PJP that required limited LDD
PJP that requires the LDD are as below:
a. Administration of Fund Sources for Bank and Non-Bank Institution;
b. Payment Initiation and/or acquiring Services for Bank and Non-Bank Institution; and
c. Account Information Services for Bank and Non-Bank Institution;
Requirements Limited LDD in Obtaining PJP License
Article 22 PBI 23/2021 stipulated that as for the correctness and completeness of the institutional requirements documents, it must be accompanied by LDD result from Independent Legal Consultant that stated about the correctness and completeness of the information contained in the institutional requirements documents for obtaining licensing from BI. The institutional requirements documents are as below:
- legality of legal entities consisting of:
a. a document showing the company’s purpose and objective, the composition of the management, the article of association, the latest amount of authorized and paid-up capital, and the most recent composition of shareholders;
b. business license forms the competent authority; and
c. recommendations for PJP Candidates who have supervisory authority in accordance with the provisions of laws and regulations; - ownership and control consisting of the most recent document showing the ownership and control structure of the prospective PJP up to the latest ultimate shareholder;
- management consisting of documents showing the integrity of the management containing statement from each member of the Board of Director (“BOD”), member of the Board of Commissioner (“BOC”), and shareholders;
- statement and guarantee from the authorized member of the BOD that the company is not in:
a. imposition of sanctions; and/or
b. legal proceedings for criminal, civil, and/or bankruptcy cases; - readiness of human resources and company organization, including organizational structure along with job descriptions, authorities, and responsibilities, including work units or functions responsible for consumer protection, implementation of anti-money laundering and prevention of terrorism financing, risk management, internal audit, and compliance.
LDD Substantial Aspects
LDD in obtaining PJP License must have aspects as below:
I. Statement letter from an independent legal consultant containing at least the following:
a. Legal consultants are professional and independent legal consultants, it is supported by the inclusion of:
i. Letter of Appointment from the Company; and/or
ii. information related to the membership of legal consultants in certain advocate associations/organizations and/or registered with the relevant authorities as legal consultants for certain activities.
b. Legal consultant has conducted LDD and based on the LDD, the legal consultant provides a statement regarding the correctness and completeness of the information contained in the permit requirements documents submitted by the Bank or Non-Bank Institution to BI, including documents regarding the legality of legal entities, capital, management, statement letters and guarantees from BOD as well as the readiness of human resources and corporate organizations.
c. Signed on a sufficient stamp duty by a partner who has the ability to provide legal services in accordance with the laws and regulations.
II. Statement Letter must be accompanied by an executive summary/resume of LDD which at least includes:
a. objectives and scope of LDD which at least covers the material of the legality of legal entities, capital, management, statement letters and guarantees from BOD, the readiness of human resources and corporate organization;
b. information on documents examined in the LDD process, which can be in the form of but not limited to article of association deed, agreements, statements, or other documents or activities carried out by legal consultant.
III. Complete LDD reports and/or legal opinion regarding the implementation of LDD do not require to be attached or submitted in the legal consultant’s statement letter.
Author: Vania Aqilla Cahyaningrum
Gaffar & Co., an Indonesian Boutique Law Firm specializing and focusing on commercial law areas e.g. financial technology.
For further queries and information, contact us:
+62 811 877 216 | info@gaffarcolaw.com | www.gaffarcolaw.com
