“Money Changer Business Activities/ Kegiatan Usaha Penukaran Valuta Asing Bukan Bank (“KUPVA BB”) may be conducted by a Limited Liability Company wholly owned by Indonesian citizens and/ or entities wholly owned by Indonesian citizens, so that the business activities of KUPVA BB closed to foreign investment.”
KUPVA BB Business Activities in Indonesia
KUPVA BB business activities are activities which include exchange activities conducted under the mechanism of selling and purchasing Foreign Banknotes (“UKA”) and the purchase of Travelers Checks (traveler’s checks in foreign currency which can be used as a means of payment). In addition, KUPVA BB operators may also conduct other business activities that are related to the implementation of KUPVA BB as long as it has been regulated in the provisions of Bank Indonesia, such as the nature of UKA.
In buying and selling UKA through KUPVA BB is stipulated that:
- The transfer of foreign bank notes must be done physically;
- The delivery of rupiah is done physically or through intrabank or interbank transfers as long as it comes from or is directed to the account of KUPVA BB organizer and;
- UKA purchases by customers from KUPVA BB operators over a certain amount (threshold) per month per customer must have underlying transactions (activities underlying UKA purchases by customers).
The sale and purchase of UKA must be done in real terms and supported by the availability of a sufficient amount of funds to finance the transaction, or not merely based on the accounting aspect (accounting).
Organizer of KUPVA BB shall regulates:
- UKA’s selling and buying rate; and
- The buying rate of the Check for Applicants, according to the market mechanism.
The organizer of KUPVA BB shall be the minimum:
- have written policies and procedures for exchange rate determination;
- using a basis for determining the exchange rate that can be accounted for and applied consistently; and
- make notes and/ or working papers in the determination of the exchange rate which includes among other factors or facts into consideration and calculation.
Bank Indonesia shall supervise the determination of the exchange rate by the KUPVA BB Operator.
Is it Eligible for Foreigners to Establish Money Changer Company in Indonesia?
According to Bank Indonesia Regulation Number 18/20/PBI/2016 concerning Non-Bank Foreign Exchange Business Activities explains that to be able to conduct KUPVA BB activities, the organizer must obtain KUPVA BB license from Bank Indonesia by fulfilling the following requirements :
- incorporated as a Limited Liability Company wholly owned by:
- Indonesian citizen; and/or
- a business entity wholly owned by an Indonesian citizen;
Permit as Operator of KUPVA BB issued by Bank Indonesia shall be valid for 5 (five) years since the grant date and may be extended based on the request of KUPVA BB Provider to Bank Indonesia.
So it can be concluded that to obtain KUPVA BB organizer license only for Indonesian citizens and/ or business entities whose all shares are owned by Indonesian citizens so that the financial services are closed to foreign citizens.
How can ELSON help you?
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Author: Belle Risca Junia/ ELSON