Application of Know Your Customer (Kyc) in Indonesian Banking

The use of technology carried out by the Financial Services Authority (OJK) encourages financial institutions to use a digital version of Know Your Customer (KYC) or e-KYC in accordance with BI regulation No. 3/10/PBI/2001 concerning the Implementation of Know Your Customer Principles ( Know Your Customer Principles). Because, customers cannot falsify data in e-KYC. The existence of e-KYC is expected to help the performance of banking in Indonesia to be better, and can also be one way to overcome the problem of money laundering. In contrast to KYC, the e-KYC process eliminates the face-to-face process when verifying prospective customers. In e-KYC, verification is completed online and in real time with direct authorization from the customer. By working in real time, e-KYC can reduce document verification time and cut costs from using a lot of paper to print or sending documents out of town. The implementation of e-KYC itself can vary. Starting from video calls, sending facial photos, utilizing population data through Electronic ID cards which have now been integrated with unique data such as fingerprints and retinas, to using digital signatures.

Know Know Your Customer Principles (e-KYC)

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Know Your Customer Principles (Know Your Customer Principles) or commonly known as KYC is a principle applied by banks to identify customers’ identities and monitor suspicious transaction activities. The application of this principle is considered important because as a way to protect the health of banks, and through the application of this principle, it is hoped that banks can identify suspicious transactions early, to minimize various risks, one of which is useful for detecting the risk of money laundering crimes. By combining technological and financial developments, there is a startup category that specifically helps people manage their finances, which is commonly called Financial Technology (Fintetch).

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In the current digital era that demands fast paced, the Financial Services Authority (OJK) encourages financial institutions to use a digital version of the Know Your Customer (KYC) or e-KYC system. The KYC process through digital is one alternative to make banking performance in Indonesia more efficient. As a result, the company will avoid money laundering because customers cannot falsify data in the imposition of e-KYC, as well as terrorism financing. It is hoped that many parties will be able to provide verification of knowing customers electronically, so that consumers will enjoy a better service process and obtain more integrated financial services.

Know Your Customer Function (e-KYC)

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It is hoped that the application of the know-customer principle will allow banks to identify suspicious transactions early, to minimize various risks, such as operational risk, legal risk, concentration risk, and reputational risk. In addition, by applying this principle, banks are expected to be able to get to know customers more deeply, not just knowing (identity) but being able to understand the characteristics of their customers through banking services.

In practice, there are still many customers who do not understand the importance of data or information related to finance. They assume that financial data is a personal matter so that in conducting business relations with banks, it is rare for them to provide real data and even seem perfunctory. Therefore, there is a need for the role of the government, banks and other related parties to disseminate information about the importance of this information, and provide an understanding that customers do not need to be afraid of their wealth if the wealth comes from a lawful business.

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In addition, bank officers must have a deeper understanding of the provisions of the crime of money laundering, so it is necessary to hold training for bank officers, because they are the foremost screeners when banks conduct business relationships with prospective customers. The existence of employee rotation and the addition of new employees requires banks to regularly conduct training, and for old employees the trainings that are given regularly can add to their deeper understanding of customers and the bank, it can also be given as a refresher so they don’t forget bank regulations. . Therefore, the role of the bank is very important to always provide training to its employees, so that it can be useful for the bank itself to be safe in conducting its business.

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Regarding the role of the e-KYC Principles in the Prevention and Crime of Money Laundering, these principles are implemented by all banks, state and private banks. Given the importance of the e-KYC principle, not only for banks but also customers. If all activities are securely integrated by the banking system, customers will not be afraid to make transactions related to their wealth at the bank.