p2p_lending_illegal (2)

Left: Head of Special Task Force for Investors Protection Tongam L Tobing

Indonesian financial service authority’s (OJK) special task force for investors protection discontinue the operations of 227 illegal P2P lending companies in the country, due to concerns about consumer protection and money laundering practices. More than half of the companies are originating from China; they have no legal entity and representative office in Indonesia.

The move followed two meetings between the task force and the companies between February 19 and July 25, which was not attended by the majority of the companies. The meetings were meant to encourage the companies to register their business as a P2P lending service provider, in accordance to Financial Service Authority Regulation No. 77 Year 2016.

OJK decided to take firm actions by requesting the companies to discontinue their operations in Indonesia. The companies are also obliged to take down their apps on Google Play and App Store, and delete their social media accounts. The task force will also work together with government institutions such as the national police’s criminal investigation agency to follow up on leads.

The agency also called upon the Ministry of Communications and Informatics to block websites and social media accounts of the companies; it has also reached out to Google Indonesia to block the apps on Google Play. It is also considering to ask for banks to block saving accounts of the illegal companies.

“We will routinely convey information on unregistered P2P lending companies. We also call upon the public to refrain from using the services of such illegal services,” head of the task force Tongam L Tobing told the press on Friday, July 27.

Also Read: Former Kudo exec Sukan Makmuri joins P2P lending startup UangTeman as CTO, COO

According to Tobing, there are concerns that the companies might be used to support money laundering or terrorism funding activities. There are possibilities for customers’ data and information to be misused, and there are also issues with taxation as the companies were not officially registered in the country.

It is revealed that these 227 companies are founded only by 155 developer companies. This means that one developer company can start up to three similar services in order to gain as many customers as possible. Apart from possessing security risks for customers, these companies may affect the public’s trust in fintech services in the long run.

Due to their unregistered status, it was difficult for the task force to detect the size of the companies’ operations in Indonesia. The number of downloads that the apps have secured on Google Play also varied from zero to 100,000.

Based on the list provided by OJK, DailySocial noted several companies with the highest downloads, including AyoRupiah, Ayopop, Bee Cash, BosPinjaman, Cash Bon, Cashstore, DokterUang, RpNow, Rupiah Kita, Rupiah Sapi, Super Uang, UangSaku, We Cash, Pinjaman Flash, Pinjaman Kilat, PinjamanKilat, Pipipi, and Zidisha.

Chinese industry players searching for a new hotbed

Tobing credited the increase of Chinese P2P lending companies entering the Indonesian market to the tightening of regulation in China itself. They opted to enter Indonesia illegally as the market is seen to have great potential for profits.

Also Read: Are crowdfunding and P2P lending good options for business financing?

OJK believes that it has provided a certain degree of freedom for foreign players. Foreigners are allowed to have up to 85 per cent ownership of a company.

“They are welcomed in the country, as long as they abide to existing law. Instead of doing it illegally. They have to have a clear office representative here, [offices at] coworking spaces are not sufficient. They also need to have a legal entity with teams and servers in the country,” Tobing stressed.

As a preventive measure, Tobing also planned to ask Google to ensure that every P2P lending app listed on Play Store has been registered on OJK before they are being launched publicly. He also reminded the public to be selective in investing or borrowing money by doing it only from companies that have been named on OJK’s site.

By far there are 63 P2P lending companies licensed and registered on OJK. Their names are available on the agency’s site and it includes Danamas, KoinWorks, Amartha, Investree, Modalku, Danacepat, AwanTunai, and KlikACC.

The article Satgas OJK Cabut 227 Platform P2P Lending Ilegal, Mayoritas Berasal dari Tiongkok was written in Bahasa Indonesia by Marsya Nabila for DailySocial. English translation and editing by e27.

Image Credit: DailySocial