On 23 February 2011, Law No.3/2011 on Fund Transfer (“Law“) has been passed by the House of Representatives. This Law was drafted to address the rapid increase of fund transfer transactions in Indonesia and the current participation of non-traditional (non banks) players in the industry. In the absence of specific laws and regulations on these transactions, it attempts to provide some legal certainty.
Article 3 of the Law sets out the general principles this Law adopts, that include the principles of ‘zero hour rules‘; ‘finality of payment/finality of settlement’; ‘delivery versus payment’; ‘acknowledgment of the netting mechanism’.
Chapter II of the Law (Articles 8 to 41) stipulates the rules and procedures for the fund transfer. A fund transfer may be conducted by either a bank or a non-bank institution which is established under Indonesian law and which has obtained the license required there for under the respective Bank Indonesia regulations.
The rules and procedures for the cancellation or revocation of and changes to a fund transfer as well as for fund returns are set forth in Chapter III. One important feature of this Chapter is the provision regarding the return of a transferred fund because the respective deal has been aborted for the reason that the company or bank conducting the transfer is out of business.
The Law also introduces provisions regarding electronic evidences for the transfer of funds. It reiterates the recognition of electronic documents or information as valid legal evidence by Law No. 11/2008 regarding Electronic Information and Transactions. On the issue of fund transfer evidence, the Law imposes the burden of proof on the bank or non-bank institution that conducts the transfer in the event of lateness or a mistake in the transfer process.
The Law came into force on 23 March 2011