Senin, November 25, 2024

New Governance Framework for BPR Introduced: Anti-Fraud Strategies and Reporting System Integrity Now Required

Following the enforcement of Regulation of the Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) No. 9 of 2024, the OJK has decided to further address the governance of rural banks (Bank Perekonomian Rakyat – “BPR”) through the issuance of Circular No. 12/SEOJK.03/2024 (“Circular 12/2024”), which has been in force since 18 October 2024. Previously, matters relating to the governance of BPR were addressed under Circular of the OJK No. 5/SEOJK.03/2016, which was subsequently amended by Circular of the OJK No. 24/SEOJK.03/2020 (collectively referred to as “Circular 5/2016”). Circular 5/2016 has now been repealed and replaced.
While maintaining the core principles on the governance of BPR that were originally outlined under Circular 5/2016 (e.g. transparency, accountability, responsibility and so forth), the new Circular 12/2024 has now further clarified governance and included a number of new governance aspects, including the mandatory application of anti-fraud strategies and efforts to ensure the integrity of utilized reporting systems and information technology.
Furthermore, as Circular 5/2016 mandated that BPR governance will be assessed with an eye on future improvements, the new framework of Circular 12/2024 has now clarified that said assessments should be carried out in line with the following factors: 1) Governance structure and infrastructure; 2) Governance process; 3) Governance outcomes (e.g. adequacy of reporting transparency, compliance with relevant regulatory frameworks, consumer protection and so forth).
In terms of the new reporting system and information technology integrity assurance mandate, Circular 12/2024 states that all BPR are required to ensure transparency in their financial and non-financial reporting to stakeholders, in line with legal Regulations on financial condition transparency. In this regard, BPR are required to establish adequate financial and non-financial reporting systems that are supported by competent human resources, as well as adequate information management systems so that they will be able to draw up accurate and transparent reports. It should be noted that BPR are prohibited from exploiting loopholes or engaging in any unethical business practices that could ultimately increase levels of risk or lead to unfair gains.

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Following the enforcement of Regulation of the Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) No. 9 of 2024, the OJK has decided to further address the governance of rural banks (Bank Perekonomian Rakyat – “BPR”) through the issuance of Circular No. 12/SEOJK.03/2024 (“Circular 12/2024”), which has been in force since 18 October 2024. Previously, matters relating to the governance of BPR were addressed under Circular of the OJK No. 5/SEOJK.03/2016, which was subsequently amended by Circular of the OJK No. 24/SEOJK.03/2020 (collectively referred to as “Circular 5/2016”). Circular 5/2016 has now been repealed and replaced.
While maintaining the core principles on the governance of BPR that were originally outlined under Circular 5/2016 (e.g. transparency, accountability, responsibility and so forth), the new Circular 12/2024 has now further clarified governance and included a number of new governance aspects, including the mandatory application of anti-fraud strategies and efforts to ensure the integrity of utilized reporting systems and information technology.
Furthermore, as Circular 5/2016 mandated that BPR governance will be assessed with an eye on future improvements, the new framework of Circular 12/2024 has now clarified that said assessments should be carried out in line with the following factors: 1) Governance structure and infrastructure; 2) Governance process; 3) Governance outcomes (e.g. adequacy of reporting transparency, compliance with relevant regulatory frameworks, consumer protection and so forth).
In terms of the new reporting system and information technology integrity assurance mandate, Circular 12/2024 states that all BPR are required to ensure transparency in their financial and non-financial reporting to stakeholders, in line with legal Regulations on financial condition transparency. In this regard, BPR are required to establish adequate financial and non-financial reporting systems that are supported by competent human resources, as well as adequate information management systems so that they will be able to draw up accurate and transparent reports. It should be noted that BPR are prohibited from exploiting loopholes or engaging in any unethical business practices that could ultimately increase levels of risk or lead to unfair gains.

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