Ronald Waas: Coordinated handling of payment system and currency
exchange crime
Speech by Mr Ronald Waas, Deputy Governor of Bank Indonesia, at the Signing Ceremony
for Cooperation between the Bank Indonesia Representative Office and Police Department in
Riau Islands Province concerning "Coordinated Handling of Payment System and Currency
Exchange Crime", Batam, 22 October 2014.
* * *
Honourable,
• Deputy Governor of Riau Islands Province; Dr Soerya Respationo, SH, MH;
• Chief of the Criminal Investigation Agency of the Republic of Indonesia, Suhardi
Alius;
• Leaders of the National Police
- WaDir. TIPIDEKSUS, Kombes Rohmat Sunanto;
- Kasubdit Upal, Kombes Agus Nugroho;
- Kabag Kerjasama antar Lembaga - Divkum Polri, Kombes Syahri Gunawan;
- Kapolda KepRi; Brigjen Polisi Drs. Arman Depari;
• Leaders of Bank Indonesia Representative Offices and Departments
- Head of the Bank Indonesia Representative Office in Area VIII, Mahdi
Mahmudy;
- Head of the Bank Indonesia Representative Office in Riau Islands Provice,
Gusto Rizal Eka;
- Executive Director of the Payment System Supervision and Policy
Department;
- Executive Director of the Money Management Department;
- Executive Director of the Legal Affairs Department;
- Executive Director of the Communication Department;
- Expert Staff of the Board of Governors, Hari Utomo;
• Members of the Riau Islands Leaders' Communication Forum;
• Mayor of Batam, H. Ahmad Dahlan, MH;
• As well as all those in attendance.
Good morning to you all,
1. First, let us praise God Almighty for blessing us here in attendance at such a
salubrious setting to witness the signing of an agreement between the Bank
Indonesia Representative Office and the Police Department here in Riau Islands
concerning "Coordinated Handling of Payment System and Currency Exchange
Crime", also known as money changers.
2. Such activity represents an integral part of institutional coordination between Bank
Indonesia and the National Police, formalised in a Memorandum of Understanding
(MoU) concerning "Cooperation to Support Task Implementation and Institutional
Authority" signed by the Governor of Bank Indonesia and the Chief of Police on
1st September 2014.
3. That Memorandum of Understanding (MoU) was followed by the signing of Working
Guidelines between Bank Indonesia and the Criminal Investigation Agency
regarding the "Handling of Alleged Payment System and Currency Exchange
Crime". The working guidelines provide impetus for further similar cooperation at all
Bank Indonesia Representative Offices and Local Police Departments throughout
the Indonesian archipelago.
Ladies and Gentlemen;
4. Coordinated handling of alleged payment system and currency exchange crime
represents synergic institutional efforts between Bank Indonesia and the Police,
particularly in the area of law enforcement. In broad terms, the scope of
coordination entails the following:
• Information and/or data exchange;
• Security and escorts;
• Supervision;
Enhanced human capital; and
•
• Socialisation.
5. There remains substantial cooperation that must be completed and refined as an
inseparable element of the agreement signed here today. In addition to the
arrangement concerning law enforcement in the payment system and currency
exchange industry, Bank Indonesia and the Police will immediately initiate a number
of other working guidelines as follows:
Working guidelines concerning coordinated security (offices and personnel) as
•
well as escorting valuable state-owned property;
Working guidelines concerning coordinated development, licensing and
•
supervision of security companies that secure the transportation of money and
are responsible for rupiah management; and
• Working guidelines concerning coordinated prevention and handling of alleged
rupiah currency crime.
6. In the case of the working guidelines concerning coordinated prevention and
handling of alleged rupiah currency crime, this represents a tangible follow-up to our
previous discussions at the seminar on the Mandatory Use of the Rupiah
Domestically. As I mentioned at that seminar, there are three dimensions to the
compulsory use of the rupiah.
7. First is the Legal Dimension. A number of regulations, including the Currency Act
and the Foreign Exchange Act as well as Bank Indonesia regulations concerning
rupiah entering and leaving Indonesia and Ministry of Trade regulations regarding
labelling the prices of goods and services all serve to strengthen the legal basis for
using rupiah in the archipelago. The variety of aforementioned regulations directly
and indirectly reinforces the mandatory use of the rupiah for all cash and
non-cash transactions settled in the territory of the Republic of Indonesia.
8. Second is the National Dimension. The rupiah is a symbol of sovereignty of the
Republic of Indonesia. Therefore, using the rupiah for all transactions settled in the
territory of the Republic of Indonesia is the duty of all citizens. That is the only way
the rupiah will become the "host" of its own nation.
9. And third is the Economic/Business Dimension. Hitherto, foreign currency
transactions in Indonesia have, amongst others, triggered greater domestic demand
for foreign currencies. The large foreign currency requirement for domestic
transactions has left the economy vulnerable to economic shocks. Domestic and
international confidence in the rupiah will bolster economic resilience, providing the
rupiah gravitas at home and abroad.
Ladies and Gentlemen,
10. Law enforcement in the area of currency exchange is critical, especially
considering that the currency exchange business is vulnerable to abuse in the form
of money laundering and terrorist funding, the narcotics trade as well as smuggling
under the guise of currency exchange.
11. The city of Batam is a hub of currency exchange activity, evidenced by the number
of licensed non-bank money changers in the city, totalling 122, which is the
second largest in Indonesia along with Denpasar. In terms of transaction volume,
up to September of this year, Batam placed fourth after Jakarta, Denpasar and
Bandung, with a contribution equivalent to Rp683 billion (4.58%).
12. Meanwhile, in terms of discovering counterfeit banknotes, based on records of Bank
Indonesia and the National Police, as many as 549 counterfeit banknotes were
discovered on the Riau Islands up to September 2014, which is far lower than the
amount seized last year totalling 1,666 banknotes. Counterfeit banknotes in Riau
Islands Province accounted for 0.66% of the national total or around 10% of the total
on Sumatra, placing Riau Islands third after the provinces of North Sumatra and
Bandar Lampung.
13. In order to prevent currency exchange crime, Bank Indonesia promulgated Bank
Indonesia Regulation No. 16/15/PBI/2014, dated 11th September 2014,
concerning Non-Bank Currency Exchange Activity. The regulation reinforces and
refines all aspects of currency exchange activity that must be licensed by Bank
Indonesia. Furthermore, the regulation is also expected to mitigate potential risk in
the form of currency exchange crime.
Ladies and Gentlemen,
14. Pursuant to the Bank Indonesia Act, Bank Indonesia is the monetary and payment
system authority. As the monetary authority, the mission of Bank Indonesia is to
create and maintain rupiah stability. Currency exchange activity, as a supporting
industry of the financial sector, plays a strategic role in terms of underpinning
rupiah stability.
15. Meanwhile, the mission of Bank Indonesia, as the payment system authority, is to
create a secure, efficient and uninterrupted cash and non-cash payment system. In
terms of the non-cash payment system, Bank Indonesia tireless strives towards a
Less Cash Society (LCS), namely encouraging the general public towards a
proclivity for non-cash payment instruments. To that end, Bank Indonesia
recently launched a National Non-Cash Movement in order to expedite the
proliferation of non-cash transactions.
16. Payment (retail) transactions in Indonesia are currently dominated by cash-based
transactions. Weak public understanding concerning the existence and use of
non-cash payment methods, coupled with limited quality infrastructure, forces the
public to favour cash-based transactions for their daily activity.
17. A survey conducted by McKinsey & Company (2013) revealed that in comparison to
its peer countries, the use of cash for retail transactions in Indonesia remains
dominant at 99.4%. The dominant use of cash is a consequence of risk and rupiah
management costs. Statistics show that each year the amount of currency in
circulation grows by around 15%, far exceeding population growth at around 2-3%
and GDP growth of around 5-6%. A less cash society is expected to precipitate
more balanced growth with more widespread use of non-cash payment instruments
amongst the public.
18. The National Non-Cash Movement is critical to hasten the realisation of a more
efficient economy as well as better governance in terms of financial
management amongst the public, business players and government institutions. To
ensure a more effective programme, the National Non-Cash Movement is run in
synergy with various ministerial and provincial government programmes through the
application of e-Government and e-Payment.
Ladies and gentlemen;
19. A key determinant of a less cash society is a sense of security for all
stakeholders when conducting non-cash transactions, in particular protection
from criminality by unauthorised parties. This was confirmed by a Bank Indonesia
survey, which found that security when conducting non-cash transactions is the
main factor cited by the general public, followed by convenience and interoperability
amongst financial service providers.
20. In order to combat potential criminality, the intensive handling of suspected crimes is
paramount. Solid coordination and consolidation between the relevant
authorities and law enforcement is expected to prevent and minimise various
payment system and currency exchange crimes. Furthermore, the imposition of
stringent sanctions will act as a deterrent to potential criminals.
21. Sound coordination and cooperation is required in the form of a clear and
transparent mechanism pursuant to the respective task and authority of Bank
Indonesia and the Police at the central and regional levels referring to prevailing
laws and regulations as well as paying due regard to principles of justice, mutual
benefit and law.
22. I warmly welcome the signing of this agreement on handling alleged payment
system and currency exchange crime as an integral part of our combined efforts to
combat various crimes.
Ladies and gentlemen;
23. Through the signing of this document, we are sure that the future handling of alleged
payment system and currency exchange crime will be more effective, thereby
bolstering efforts to protect the general public through the creation of a sound
and secure payment system and currency exchange industry.
24. The working guidelines will help combine effective communication, intensive
coordination and synergic collaboration between Bank Indonesia, the Police and
the Government and the central and local levels, whilst ensuring all stakeholders
maintain effective law enforcement in the payment system and currency exchange
industry.
25. In closing, with the confidence that God is always by our side, may He bless our
endeavours towards a brighter future. Thank you.