Jakarta (The Jakarta Post/ANN) - Analysts say bank customers in Indonesia should be aware of the risks of fraud given an increasing number of investment products offered with high rates of returns.
Doddy Ariefianto, an analyst with the Deposit Insurance Corporation (LPS), said that customers should take a "safety first" approach in investing, especially for new financial products.
Customers should take action to ensure that their wealth would be safe, well managed and free from the type of fraud that plagued several local Citibank customers in 2011, Doddy said.
He was referring to the case of former Citibank customer relations manager Inong Malinda Dee, who the South Jakarta District Court sentenced to eight years' imprisonment and to pay a 10 billion rupiah (US$1.03 million) fines for embezzling from her clients. Malinda reportedly embezzled 40 billion rupiah from her premium
Although local banks have made several changes in their wealth management services following the Malinda scandal - some optional imposed by government regulators - customers should continue to prioritise the safety of their investments over high returns, Doddy said.
After the Malinda case became public, Bank Indonesia (BI) ordered banks to stop accepting new priority customers and offering wealth management products for a month, telling them to use the time to upgrade internal controls. The central bank also issued a regulation on the application of risk management on premium clients.
Some of key points of regulation involved staff rotations, conducting thorough customer risk profiles and ensuring that transactions were carried out by authorised individuals.
State-owned Bank Negara Indonesia (BNI) has lauded its internal mechanisms, which it said was the reason it was one of the first banks to resume normal operations after the ban was lifted.
The deputy division head of BNI's consumer and retail product management division, Teddy Atmadja, said that it required customers to carry out all transactions at branch offices.
"We have prepared another procedure should the situation require it. Relationship managers are also forbidden from receiving blank checks from their clients." Implementing the policy had not been without incident, Teddy said. Several customers have complained that the new procedures were complicated.
BNI currently has 150 relationship managers handling over 14,000 priority banking and wealth management customers.
Meanwhile, Standard Chartered's wealth management general manager Lanny Hendra said that the bank had started rotating relationship managers as part of its prudent practices. It also calls clients to ensure that they understand any financial products ordered.
According to BI spokesperson Difi A. Johansyah, the central bank conducted routine supervision to ensure banks had been prudent. "So far, things have been good," he said.
Difi acknowledged that wealth management customers were normally very trusting of their managers due to long relationships. However, he said that clients should always be cautious to prevent fraud.
Contacted separately, ANZ Indonesia vice president director and consumer banking head Ajay Mathur said that his bank had created a separate unit to ensure business processes were done properly.
"We also run quarterly assessments on every single branch. We do not accept scores less than 80. If branches are scoring less than 80 at any time, we will make sure that there is somebody or a team investing time to look back at what needs to be corrected," he said.
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