Bank Indonesia Regulation (Peraturan Bank Indonesia or PBI) establishes the legal foundation of Indonesiaʼs financial regulatory system. It is issued by the central bank; these regulations have defined the standards and obligations that focus on the operation of financial institutions within Indonesia and sectors of banking, payment systems, anti-money laundering (AML), and fintech innovation.
As Indonesia executes efforts in its digital and economic transformation, having an understanding of PBI has become essential for banks, fintech firms, and payment providers that are operating in the market. The framework is consistently evolving in order to address the emerging developments in todayʼs age, which include a set of stricter cryptocurrency policies, enhanced AML expectations, and overall oversight of digital payment platforms.
Understanding the Legal Framework of PBI
PBI consists of a set of regulations that are issued by Bank Indonesia, the countryʼs central bank, as well as the monetary authority. These rules are applied to a bigger range of financial entities and are legally applicable across different areas of the financial system.
The extent of PBI includes monetary operations, banking supervision, foreign exchange control, AML obligations, and regulation of overall digital payment systems. Entities are most likely to be subjected to these regulations, which include commercial banks, payment processors, e-money issuers, currency exchanges, P2P lenders, and foreign exchange dealers.
Failure to comply with PBI can negatively result in consequences or sanctions that could range from administrative penalties and fines all the way to the suspension or revocation of operational licenses. For serious cases, such as money laundering or terrorism financing, non-compliance could result in criminal referrals. The framework follows a risk-based approach, adjusting compliance expectations depending on the size of the institution's activities and systematic importance.
Key Areas Regulated by PBI
Anti-Money Laundering and Counter-Terrorism Financing
PBI enforces well-established AML and CFT requirements that align with the global standards, such as those from the Financial Action Task Force (FATF). These requirements consist of customer due diligence, enhanced screening of high-risk individuals or entities, transaction monitoring, and suspicious activity reports.
All entities that are regulated must apply strict Know Your Customer (KYC) procedures. This protocol calls for verifying the identity of customers, identifying the beneficial ownership, and lastly, assessing customer risk profiles. All entities that are regulated are required to maintain customer records for a minimum of 5 years and must appoint compliance officers in order to manage internal AML efforts.
Payment System Governance
PBI regulations are responsible for all aspects of Indonesiaʼs payment systems, setting requirements for licensing, operational standards, security control, as well as customer protections. Additionally, this applies to e-money operators, digital wallets, and payment service providers.
In order to receive a license, entities are required to showcase technical capability, financial integrity, and operational resilience. The framework includes rules and regulations around securing transaction processing and dispute resolution to ensure a stable and secure payment space.
Foreign Exchange and Currency Controls
PBI is also responsible for mandating the use of the Indonesian Rupiah (IDR) for domestic transactions and has established clear reporting rules, especially for cross-border and foreign exchange activities. Only authorized financial institutions are allowed to handle foreign exchange, and all international transactions are obligated to comply with disclosure and reporting standards
Digital Asset and Cryptocurrency Restrictions
Additionally, Bank Indonesia has also introduced strict rules in preventing the usage of cryptocurrencies as payment means. PBI regulations restrict payment providers and merchants from accepting digital currencies for transactions, which further reinforces the exclusive usage of the Rupiah as legal tender. These restrictions showcase the central bankʼs meticulous approach to financial stability and integrity.
Notable PBI Regulations for AML & Fintech
1. PBI No. 19/10/PBI/2017: AML/CFT Requirements for Payment Providers
This regulation established a comprehensive AML and CFT financing obligation specifically for payment service providers that are operating inside Indonesia and its financial system. This legislation requires payment gateway operators, electronic money platforms, remittance firms, and money changers to apply
resilient AML compliance programs targeted specifically to their operational risk exposure.
Specific requirements include measurements such as customer due diligence for verifying customer identity and assessing transaction risk. Also, enhanced due diligence for high-risk customers, including Politically Exposed Persons (PEPs), and systematic or automated screening against international sanctions lists,
including UN, OFAC, and ASEAN. These procedures should be regularly reviewed to ensure alignment with evolving suspicious transaction reporting (STRs) to
PPATK, known as Indonesiaʼs Financial Intelligence Unit, in a timely manner. Also, documented records should be maintained and stored for a minimum of 5 years and refer to a compliance officer responsible for AML program oversight. Entities are required to regularly do an internal training for employees to ensure that staff understand and implement AML obligations in an effective way.
2. PBI No. 20/6/PBI/2018: Cryptocurrency Payment Prohibition
This legislation has established an explicit prohibition on cryptocurrency usage as a payment within the countryʼs domestic transaction system. The framework prevents payment service providers, merchants, and financial institutions from accepting digital assets such as Bitcoin, Ethereum, and USDT for transaction settlement.
This regulation applies comprehensive restrictions to all e-money operators and payment system facilitators. By doing so, this establishes clear penalties for violation, which can include license suspension and administrative sanctions, or legal actions. These measurements are done to preserve monetary sovereignty and reduce risks in the system from unregulated digital payment means.
Although cryptocurrency trading is considered legal under commodity regulations, which are administered by separate authorities, PBI restrictions keep a clear division between trading activities and payment services. This partition highlights Bank Indonesiaʼs commitment to preserving the integrity of the national currency and payment infrastructure.
3. PBI No. 23/6/PBI/2021: Indonesian Rupiah Usage Requirements
The requirements on Rupiah usage and its legislation strengthen the legal status of the Rupiah as the main accepted currency within the national payment system. This framework criminalizes the promotion or facilitation of non-IDR currency payments inside Indonesiaʼs domestic economy. This includes advertising, offering, or promoting foreign currency utilization in both physical and digital transactions.
Implementation Impact on Financial Technology Sector
Electronic Wallet and Payment Service Providers
PBI regulations obligate digital wallet providers and payment platforms to implement end-to-end programs that include customer identification protocols, automated transaction surveillance, and submission of suspicious transaction reports. Meeting these requirements is essential, but we also need help with compliance technology to make operations smoother.
One major e-wallet firm in Indonesia recently invested $2.5 million to improve its AML system, which incorporates real-time transaction filters and more fine-tuned risk profiling mechanisms for users. This initiative also employs expanding its compliance to address heightened monitoring and audit obligations.
The upgrade has allowed the provider to stay compliant while handling over 100 million transactions per month. As regulatory expectations increase and intense, firms with more flexibility and more compliance are most likely to gain market advantage.
Cryptocurrency Exchange Platforms
Although cryptocurrency trading remains legal under defined regulations, PBY restrictions prevent crypto exchanges from being considered as digital assets for merchant transactions. Exchanges must always be clearly separated from trading activities and payment services to avoid regulatory breaches
Buy-Now-Pay-Later and Lending Applications
BNPL platforms and digital lending apps that are classified as payment service providers are required to comply with PBU AML obligations, which include customer due diligence and suspicious transaction reporting. On top of that, they are also required to maintain strict assessment mechanisms and regular compliance oversight.
Impact on Fintech and Crypto Startups
| Impact Area | Implication |
| E-wallets & PSPs | Must follow strict AML procedures and limit accepted payment types. |
| Crypto Exchanges | Cannot integrate crypto as payment rails and can only support trading activities. |
| BNPL/Lending Apps | Subject to AML obligations if classified under PSP or OJK scope. |
| Cross-border Remittance Apps | Must use licensed FX channels and comply with KYC rules controlled by PBI regulations. |
FAQ's Blog Post
Bank Indonesia Regulation (PBI) is a legal framework issued by Bank Indonesia to regulate monetary, payment system, and financial system stability matters in the country.
PBIs commonly address monetary policy, foreign exchange rules, anti-money laundering, digital payment regulations, and banking supervision.
Financial institutions, banks, payment service providers, and other entities operating under Indonesia’s financial system must comply with PBIs.
PBIs are issued directly by Bank Indonesia and focus specifically on monetary and payment system stability, unlike OJK regulations which cover broader financial services.
The latest PBIs are published on Bank Indonesia’s official website and are often accompanied by explanatory documents and implementation guidelines.
Bank Indonesia updates or issues new PBIs as needed, depending on economic developments, technological changes, and regulatory needs.
Yes, PBIs are legally binding regulations. All relevant institutions must adhere to them to avoid administrative or legal penalties.
PBIs often include specific provisions for fintech companies, particularly regarding payment systems, electronic money, and anti-money laundering compliance.
