Abstract
Anti-money laundering laws also create a major dilemma for banks, the banks also could be held liable as constructive trustee for the rightful owner of the corrupted funds. Hence, this study aims to find out and explain the essences of know your customer principles relates to bank confidentiality in accordance with the Indonesian Anti-Money Laundering Laws. Type of the research was an empirical legal research. The research was conducted in the Province of Yogyakarta, Indonesia, precisely in several public and private-owned banks. The results show that the know your customer principle is carried out in the context of applying prudential banking to protect banks from various risks in dealing with customers and counter-parties. For this reason, it is necessary to have a common perception and understanding between the Bank and the costumers regarding the urgency of applying the KYC principles. In supporting the application of the principle of knowing customers, it is necessary to support adequate technology and information systems that can monitor each customer transaction that is tailored to the character and profile of the customer. For instance, support for systems and information technology like this is certainly very necessary even though it requires a large investment or cost. The application of the principle of knowing customers is part of the implementation of bank risk management in general. Keywords: Bank; Know Your Customer Principles; Money Laundering DOI : 10.7176/JLPG/81-12
Highlights
Money laundering has been described by many as the lifeblood of crime and is a major threat to the economic and social well-being of societies.1 In recent years a number of countries have implemented laws to fight against money laundering and Indonesia is no exception
Banks are considered to be an important source of valuable information for law enforcement agencies to detect money laundering and more importantly to follow the money trail of criminal organization which thereby would lead to the prosecution of the perpetrator who has enjoyed their illicit profits for a long time
Since the Government issued Law Number 8 of 2010 concerning Prevention and Eradication of Money Laundering Crimes, Bank Indonesia as the monetary authority and bank supervision has issued a regulation on money laundering which refers to the law on money laundering, namely Bank Indonesia Regulation Number 14/27/PBI/2012 concerning the Application of Anti-money Laundering and Prevention of Terrorism Funding Programs for Commercial Banks; which directly replaces previous regulations which are considered to be no longer compatible with national, regional and global dynamics and the increasingly complex products, activities and information technology of banks, which have a higher risk of utilizing banks in money laundering and terrorist funding
Summary
Money laundering has been described by many as the lifeblood of crime and is a major threat to the economic and social well-being of societies. In recent years a number of countries have implemented laws to fight against money laundering and Indonesia is no exception. In recent years a number of countries have implemented laws to fight against money laundering and Indonesia is no exception. There is no denying that banking institutions as one of the financial institutions have strategic value in the economic life of a country. Banks are required to put in place effective anti-money laundering measures to guard against the flow of ‘dirty money’ into the financial system. Banks are considered to be an important source of valuable information for law enforcement agencies to detect money laundering and more importantly to follow the money trail of criminal organization which thereby would lead to the prosecution of the perpetrator who has enjoyed their illicit profits for a long time
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