PPATK Develops Strategy To Prevent Community Losses From Illegal Loans

JAKARTA - The Center for Financial Transaction Reports and Analysis is currently developing a strategy to prevent public losses due to the proliferation of illegal online loans which have become very disturbing.

For this reason, as input, the Financial Transaction Reports and Analysis Center (PPATK) held a Focus Group Discussion (FGD) on Efforts to Detect, Prevent, and Eliminate Illegal Online Loans which were carried out online and offline from the Center for Anti-Money Laundering and Terrorism Financing in Depok, Java. West, Monday.

"The FGD is a strategic step for PPATK in following up on the direction of the President of the Republic of Indonesia Joko Widodo when opening Virtual Innovation Day 2021 which was held by the Financial Services Authority some time ago," said PPATK Deputy Prevention Muhammad Sigit in a written statement quoted by Antara, Monday, November 22.

At that time, the President asked the competent authorities to take firm action against illegal online lending practices, so that people would no longer be deceived and ensnared in illegal online loans. In addition, in order to encourage the governance of the provision of online loan services to be considered and implemented properly, so that the accelerated growth of the online loan industry in Indonesia is not followed by many frauds and crimes that harm the community.

Muhammad Sigit said technological developments were growing so rapidly, making the Indonesian economy move so dynamically and fostering various financial innovations, one of which was financial technology (fintech).

Fintech in Indonesia continues to experience growth and has a positive impact on the Indonesian economy, such as providing convenience for the public in conducting financial transactions, facilitating access to funding to drive and improve community small businesses, supporting public financial inclusion, and accelerating economic turnover. In addition, Fintech also helps business actors to obtain low-interest capital through online loans.

"But now, many people are entangled in online loans with high interest rates and even experience intimidation from illegal online loan providers," he said.

He added that in various cases related to these illegal online loans, PPATK saw the use of Ponzi schemes in illegal online loan transactions, where an illegal online loan provider joined a group with other illegal online loan providers.

"In the Ponzi scheme, when a person is tied to an illegal online loan provider and fails to pay his debts, that person will try to borrow from other illegal online loan providers who are actually part of the same illegal online loan provider group," he said.

Therefore, the debt burden with high interest borne by the person becomes even greater.

Based on PPATK's analysis, it was found that there was an alleged flow of proceeds of crime originating from and outside the territory of Indonesia and being used as capital in the illegal online loan business.

Interconnectivity between domestic financial institutions and international financial institutions as well as the rapid flow of funds into and out of Indonesia (illicit financial flows) originating from efforts to obscure or disguise the origins of money from predicate crimes such as corruption or drugs are things that need to be watched out so as not to hurt economic growth.

OJK said that as of September 30, 2021, there had been IDR262.93 trillion in accumulated loans that were distributed to the public with 71.06 million user accounts.

Director of Financial Technology Regulation, Licensing, and Supervision of the Financial Services Authority, Tris Yulianta, said that there are at least four main factors driving the number of people trapped in illegal loans (loans). First, the urgent need of the borrower to make a living and other basic needs. Second, the ease of borrowing by using an application with easy terms and fast disbursement. Third, it is easy to create applications and offers and fourth, financial literacy and digital literacy are still low.

''PPATK together with LPP (Supervisory and Regulatory Agency) seeks to increase risk awareness and prudential standards so that the Application of the Principles of Recognizing Service Users (PMPJ) will help especially bank and non-bank financial service providers.

Present at the FGD were representatives from the Financial Services Authority, the Indonesian Fintech Association (AFTECH), the Indonesian Joint Funding Fintech Association (AFPI), the Ministry of Communication and Information (Kominfo) and PPATK.