BI summons 17 forex traders over KYC case
The Jakarta Post, Jakarta
The central bank, as part of efforts to stop speculation and money laundering in the foreign exchange market, has summoned 17 nonbank forex traders that have failed to implement the global best practice of "knowing your customer" (KYC).
Bank Indonesia said in a statement released on Monday it would revoke the licenses of the forex traders if they failed to respond to the summonses within a week's time, and if they did not immediately comply with the KYC requirements contained in central bank Regulation No. 6/1/PBI/2004 on forex traders.
The regulation, issued on Jan. 6, 2004, requires all forex traders operating in the country to submit to the central bank standard procedure and implementation guidelines for KYC within a year after the implementation of the regulation.
"Knowing your customer" is a principle that basically requires forex traders to keep a record of the identities and transactions of all their customers, as well as to implement risk management guidelines for the transactions.
The central bank's action comes at a time when the rupiah remains under pressure from speculators who might take advantage of the currency's weakness and the relatively small size of the local foreign exchange market, which sees about US$1 billion in daily trading.
Bank Indonesia issued an earlier regulation preventing banks from receiving offshore dollar loans above $1 million without underlying transactions, in order to prevent speculative forex trading.
Several analysts, however, warned that speculators could circumvent the regulation by setting up phony investment firms and forex trading companies, and called for the central bank to take more concrete preventive measures.
The rupiah ended at Rp 10,180 against the U.S. dollar on Monday, according to Bloomberg, slightly down from Friday's close of Rp 10,155 against the greenback. The rupiah has depreciated by some 10 percent this year.
Meanwhile, Bank Indonesia also announced the issuance of new Rp 50,000 and Rp 10,000 bills on Oct. 20.
"The issuance of the new bills is part of BI's efforts to provide the public an adequate amount of payment bills that are standardized in size and security features," Bank Indonesia deputy governor for payment systems Maulana Ibrahim said.
The 1999-issued Rp 50,000 and 1998-issued Rp 10,000 notes will remain valid for payment.