Imposing criminal sanctions on illegal investment companies will create a deterrent effect and strengthen consumer protection.
By
BENEDIKTUS KRISNA YOGATAMA
·4 minutes read
JAKARTA, KOMPAS — After Law No. 4/2023 on the Development and Strengthening of the Financial Sector (P2SK) was passed, illegal and unlicensed entities will be immediately subject to criminal sanctions. This update is expected to boost consumer protection and create a deterrent effect for perpetrators.
Financial Services Authority (OJK) chief executive Friderica Widyasari Dewi, who monitors the behavior of financial services businesses, education and consumer protection, said after the ratification of the P2SK Law that there have been significant changes in terms of eradicating illegal firms that offered financial services. They were deemed illegal because they were neither licensed nor registered with the OJK, the supervising authority and regulator of the financial services sector.
Among these changes is the strict prohibition on collecting, managing and distributing public funds to the community without permission from the OJK. This violation is punishable by a minimum of five years and a maximum of 10 years in prison. In addition, perpetrators will be subject to criminal sanctions of a minimum fine of Rp 1 billion and a maximum fine of Rp 1 trillion. This provision is stipulated in articles 237 and 305 of the P2SK Law.
This is different from before, when illegal investors could be prosecuted only if their victims reported them to the police.
"Now, perpetrators of fraudulent investment crimes and other illegal entities can be subject to very serious penalties. This is to provide a deterrent effect for perpetrators and encourage optimal consumer protection," Friderica said during the "Socialization of the Behavioral Monitoring of Financial Services Business Actors and Consumer and Community Protection" event in Jakarta on Tuesday (14/3/2023).
Consumer financial information service activities at Financial Services Authority (OJK), Jakarta, Thursday (14/2/2019).
Sarjito, the OJK’s deputy commissioner for supervision of the behavior of financial service business actors and consumer protection, added that illegal entities would be prosecuted in coordination with ministries and other institutions under the Investment Alert Task Force (SWI) umbrella.
According to Sarjito, his side will conduct patrols in cyberspace to take action against illegal investment entities. In addition, his side will also collect information from public complaints or reports regarding the activities of illegal investment firms.
Monitoring behavior
In addition to direct criminal sanctions for illegal investment entities, another update since the enactment of the P2SK Law is strengthening oversight of the behavior of the financial services sector (market conduct).
This is reflected in the expansion of authority and the name of the relevant board of commissioners, from the Consumer Protection and Education board to the board for Monitoring Financial Services Behavior, Education and Consumer Protection Business Actors.
Sarjito said that with this expansion, the OJK’s supervision would not only oversee a company's financial health (prudential) performance, but also the behavior of financial services actors. Prudential oversight was under the chief executive of the related financial sector, such as banking, capital markets, insurance and pension funds. As for monitoring behavior, part of it related to how agents behaved in marketing financial services products.
"No division of a financial services company has progressed without protecting consumers. They definitely want to be trusted and sought by consumers," said Sarjito.
with this expansion, the OJK’s supervision would not only oversee a company's financial health (prudential) performance, but also the behavior of financial services actors
Contacted separately, researcher Nailul Huda at the Institute for Development of Economics and Finance (Indef) said imposing direct criminal sanctions on illegal entities would strengthen consumer protection further.
"These illegal entities have greatly disturbed the public and also legal financial service providers. The criminal sanctions can provide a deterrent effect and prevent the reemergence of similar illegal entities in the future," said Huda.
The Investment Alert Task Force closed 50 illegal online lending entities since early 2022.
Prosecution
The OJK, together with all SWI members consisting of 12 ministries/institutions, have continued to try and eradicate illegal online investments and lenders. In January 2023, the SWI closed down 10 unlicensed entities offering investments and followed up on the findings of 50 illegal online lending platforms. The SWI has ordered these illegal entities to reimburse losses to the public.
According to the SWI’s data, the total social losses caused by illegal investments in 2022 reached Rp 112.2 trillion, a significant increase compared to Rp 2.54 trillion in 2021.
One of the reasons for the increase in losses was the disclosure of the Indosurya Savings and Loans Cooperative case.
According to the SWI’s data, the total social losses caused by illegal investments in 2022 reached Rp 112.2 trillion, a significant increase compared to Rp 2.54 trillion in 2021.
Apart from that, public losses also incurred through various forms of illegal investment, such as money games, illegal forex investments, illegal mortgages, illegal multilevel marketing (MLM) and illegal trading robots.
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