Sources of Funding Are Not Controlled

KOMPAS/BENEDIKTUS KRISNA YOGATAMA

Victims of online loans hold up posters accusing the Financial Services Authority (OJK) of “being asleep” during a rally on Saturday (23/3/2019) at the Jakarta Police Headquarters.

JAKARTA, KOMPAS — The government has not yet issued a specific regulation to oversee the sources of funding for the country’s rapidly growth peer-to-peer (P2P) lending platforms, which can be potentially used for money laundering practices.

Until now, there are no regulations that can be used to supervise online lending platforms. The Financial Services Authority (OJK) has cooperated with the Financial Transaction Reports and Analysis Center (PPATK) since 2013 to investigate alleged money laundering practices in digital businesses, including financial technology (fintech) companies.

Dewi Fadjarsarie Handajani, a senior analyst at the OJK’s anti-money laundering and prevention of terrorism funding unit, acknowledged that online lending platforms are vulnerable to money laundering.

The easy process given to investors to provide funding and borrowers to obtain funds has led to the lack of supervision.

PPATK deputy chairman Dian Ediana Rae revealed that online lending platforms could be used by corruptors or other types of criminals for money laundering. They can easily channel their money into the online lenders due to the lack of control. "No regulation has been issued that can be used as the legal basis for monitoring and tracking alleged laundering practices on online lending platforms," said Dian.

Difficult to track

According to the program director of the Institute for Development of Economics and Finance (Indef), Berly Martawardaya, online lending platforms were quite vulnerable to money laundering practices because it was difficult to track the sources of their funding. At present, there is no control on the investors of the online borrowers.

Berly said the money provided as loans could come from the proceeds of crime. “So, the funds look as if they are illegitimate,” he said in Jakarta on Wednesday.

KOMPAS/WISNU WIDIANTORO

A man looks at an SMS dated 14 June 2019 promoting an online loan on the screen of his mobile phone on Sunday (16/6/2019) in Jakarta.

In addition, the easy requirements imposed on borrowers to obtain funds such as only by uploading their ID card and photo makes control difficult. The applicants can just upload a fake photo and ID card to obscure their identity.

The government, said Berly, needed to fix the electronic ID card system so that the identity of the borrower or loan recipient can be ascertained. It will also make it easier for authorities to track and supervise the sources of the funding.

According to Kompas, PT DSI, one of companies involved in online lending services, known with by its RupiahPlus and Perdana application, has a parent company located in the Cayman Islands, a tax haven.

Referring to company ownership documents issued by the Directorate General of Legal and General Administration at the Law and Human Rights Ministry with the deed of March 21, 2019, PT DSI\'s shareholder is DTL.

DTL’s office address is located at the Sertus Incorporations Limited office complex, Sertus Chambers, Governors Square, Suite No 5-204, 23 Lime Tree Bay Avenue, Grand Cayman, Cayman Islands.

PT DSI is a fintech company that registered with the OJK on Feb. 26, 2018. Due to problems with customers, the RupiahPlus application was no longer registered with the OJK.Victim

Separately, a number of victims of online lending platforms sued the OJK and the Communications and Information Ministry.

The two institutions were considered to have failed to protect digital borrowers. Citing data from the Central Jakarta District Court, the lawsuit was filed by 31 people on February 6, 2019. They also sued 13 fintech companies. On Tuesday, the fifth hearing of the case took place.

Lawyer for the plaintiff Efendi Saman explained that his client was a borrower and suffered losses due the use of his personal data without permission and was accused of embezzling the company’s money by debt collectors from the online lender.

KOMPAS/BENEDIKTUS KRISNA YOGATAMA

Employees are seen at work on 28 March 2019 at the developer of the banned financial technology application, Angel Cash, at the Grha Arda building in Kuningan, Jakarta. The Financial Services Authority (OJK) and the Information and Informatics Ministry blocked the application in September 2018.

OJK spokesman Sekar Putih Djarot said that the OJK respected the ongoing legal process. According to Sekar, the OJK Regulation Number 77 of 2016 concerning the Information Technology-Based Public Lending and Borrowing Services also included stipulations to protect consumers of the online lenders. (BKY/IGA/ILO)