Observer: Temporary transaction suspension must comply with regulations

Public policy observer Agus Pambagio has assessed that the temporary blocking or suspension of transactions by a bank for law enforcement purposes can be carried out as long as it has a basis of authority and complies with applicable regulations.

According to him, banks in principle need to follow up on requests from law enforcement officials as long as they are made through a legitimate mechanism.

He continued in his statement in Jakarta on Thursday that banks are not in a position to determine whether or not a criminal act has occurred, so actions taken against an account need to be understood as part of the law enforcement process.

“In reality, the Police can directly ask a bank to suspend transactions in corruption or other criminal cases. In other words, the bank follows the prevailing policies and regulations,” he said.

According to him, this context is important to understand so that banks are not perceived as parties that unilaterally stop customers’ access to their accounts.

Agus said banks carry out their function as financial service providers that have an obligation to comply with banking regulations while also following up on requests from officials who have a basis of authority.

“Banks follow the prevailing policies and regulations,” he said in response to the polemic surrounding a Bank Mandiri account linked to the fundraising activities of the Pati United Community Alliance (AMPB).

Agus assessed that in situations like this, all banking actions must remain within the corridor of law and regulation. Therefore, Bank Mandiri’s position in the AMPB case needs to be viewed proportionally, namely as a party carrying out its obligations in accordance with applicable regulations, not as a party determining whether or not a criminal act has occurred.

In line with this, the Chief Executive of Banking Supervision at the Financial Services Authority (OJK), Dian Ediana Rae, stated that financial service providers may suspend transactions in accordance with statutory regulations.

The OJK said the steps taken by Bank Mandiri have referred to the applicable regulations.

Dian explained that transaction suspension is a temporary measure that has a legal basis, among others regulated in the Anti-Money Laundering Law and Article 47 of POJK No.8/2023 concerning the Implementation of Anti-Money Laundering, Counter-Terrorism Financing, and Counter-Proliferation Financing of Weapons of Mass Destruction Programmes in the Financial Services Sector.

This mechanism needs to be distinguished from account blocking, he added, and does not in itself indicate that the account holder has committed a criminal act.