POJK Number 41 of 2025 Tightens Licensing Requirements and Imposes Sanctions on Foreign Financial Representative Offices

Introduction

On 22 December 2025, the Financial Services Authority (“OJK”) issued Financial Services Authority Regulation Number 41 of 2025 on Representative Offices of Financing Institutions, Venture Capital Companies, and Other Financial Services Institutions Headquartered Outside Indonesia (“POJK 41/2025”), which took effect on the same date. This Regulation establishes new compliance standards for foreign Financing Institutions, Venture Capital Companies, and Other Financial Services Institutions (“PVL”) that intend to establish or have already established a representative office (“KPPVL”) in Indonesia, particularly with respect to legality and reporting obligations.

The issuance of POJK 41/2025 is intended to ensure legal certainty, fairness, and the application of prudential principles in the operation of foreign representative offices amid global economic integration. OJK considers it necessary to introduce a responsive regulatory framework to monitor the presence of representative offices as lawful channels for information exchange, while simultaneously preventing potential legal risks arising from unmonitored cross-border activities.

 

Key Provisions

Licensing Obligation for the Establishment of a Representative Office

Foreign PVLs are required to obtain official approval from OJK prior to establishing a KPPVL in Indonesia. Under Article 2 and Article 3, such PVLs must have a good reputation, demonstrate a commitment to contributing to the Indonesian economy, and are required to locate their representative office in a provincial capital city. The application for approval must be supported by complete documentation, including copies of the deed of establishment, audited financial statements, and a letter of approval from the home country authority confirming that the PVL satisfies prudential requirements.

Leadership and Human Resources Requirements

Pursuant to Article 5, a prospective Head of a KPPVL is required to pass a fit and proper test conducted by OJK prior to official appointment. Article 7 provides that the Head of the KPPVL must reside in Indonesia and is prohibited from concurrently holding a leadership position in another company or in more than one foreign company representative office. Where a KPPVL employs foreign workers, Article 8 requires full compliance with the prevailing Indonesian manpower laws and regulations.

Limitations and Scope of Activities

Article 11 limits the scope of KPPVL activities strictly to non-operational functions, including providing information, assisting in the supervision of head office financing activities, conducting promotional activities, and facilitating the handling of consumer complaints. POJK 41/2025 prohibits KPPVLs from carrying out operational business activities (such as direct fund disbursement), while allowing KPPVLs to engage in cooperation with local PVLs in Indonesia.

Periodic Reporting Obligations

KPPVLs are subject to reporting obligations as regulated under Article 12, whereby they are required to submit quarterly reports on debtors and financing positions no later than 5 (five) working days in the following month. Furthermore, Article 13 and Article 14 require the submission of an annual work plan no later than 30 November and a report on the realization of such work plan by 15 February of the following year. Changes in data, such as office address or the legal name of the head office, are also required to be reported within the deadlines stipulated under Article 15 and Article 16.

Office Closure Mechanism

Based on Article 22, OJK is authorized to close a KPPVL upon a request from the head office, the revocation of the head office’s license in its home country, or as a result of OJK supervision. In emergency situations where the head office’s business license is revoked by the relevant home country authority, Article 24 requires the KPPVL to report such revocation to OJK no later than 3 (three) working days and to immediately cease all activities and settle its obligations.

 

Sanctions

Article 9 and Article 17 regulate the imposition of sanctions ranging from written warnings, administrative fines in the amount of IDR 1,000,000.00 per working day (with a maximum of IDR 30,000,000.00), activity restrictions, to office closure for serious violations such as conducting operational business activities. Repeated violations may also trigger a re-assessment of the Head of the KPPVL as regulated under Article 10 and Article 18.

Article 20 provides for sanctions against KPPVLs that fail to submit data and information requested by OJK for supervisory purposes. Sanctions in the form of written warnings may be imposed up to 3 (three) consecutive times, each with a validity period of up to 30 (thirty) working days. If, after the imposition of written warnings, the KPPVL still fails to fulfill its data submission obligations, OJK will impose sanctions in the form of restrictions or prohibitions on conducting activities.

Article 28 regulates sanctions in the form of written warnings for KPPVLs that violate their obligations following the revocation of the head office’s license, as follows:

• Failure to report the revocation of the head office’s business license by the home country authority to OJK within the 3 (three) working day deadline.
• Failure to cease activities or to settle obligations after a closure decision has been issued.

Violations of Article 28 may also trigger a re-assessment of the Head of the KPPVL.

 

Transitional Provisions

Pursuant to Article 36, foreign PVLs that had been operating in Indonesia prior to 22 December 2025 are required to obtain approval for the establishment of a KPPVL from OJK no later than 22 June 2026. However, OJK affirms that the disbursement of capital or financing that had already been carried out by KPPVLs prior to 22 December 2025 remains valid until the end of the relevant financing period.

 

Closing

POJK 41/2025 imposes clear consequences on KPPVLs, including the risk of license suspension, mandatory closure, and administrative fines if they fail to comply with reporting standards or are proven to have exceeded their authority as representative offices. Businesses are encouraged to promptly adjust their licensing status and organizational structures within the six-month adjustment period in order to safeguard the continuity of their business activities in Indonesia.