Know Your Customer (KYC) Principles Relates to Bank Confidentiality as an Effort to Prevent Money Laundering Crimes

Abstract

Anti-money laundering laws also create a major dilemma for banks, the banks also could be held liable as constructive trustee for the rightful owner of the corrupted funds. Hence, this study aims to find out and explain the essences of know your customer principles relates to bank confidentiality in accordance with the Indonesian Anti-Money Laundering Laws. Type of the research was an empirical legal research. The research was conducted in the Province of Yogyakarta, Indonesia, precisely in several public and private-owned banks. The results show that the know your customer principle is carried out in the context of applying prudential banking to protect banks from various risks in dealing with customers and counter-parties. For this reason, it is necessary to have a common perception and understanding between the Bank and the costumers regarding the urgency of applying the KYC principles. In supporting the application of the principle of knowing customers, it is necessary to support adequate technology and information systems that can monitor each customer transaction that is tailored to the character and profile of the customer. For instance, support for systems and information technology like this is certainly very necessary even though it requires a large investment or cost. The application of the principle of knowing customers is part of the implementation of bank risk management in general.

Keywords: Bank; Know Your Customer Principles; Money Laundering

DOI: 10.7176/JLPG/81-12