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The Legal Protection of Sharia Financial Technology In Indonesia (Analysis of Regulation, Structure and Law Enforcement)
Nurhasanah1, Indra Rahmatullah2
1Syarif Hidayatullah State Islamic University (UIN) Jakarta
2Syarif Hidayatullah State Islamic University (UIN) Jakarta
1[email protected], 2[email protected]
Abstract: Financial technology (fintech) services have developed rapidly on the world including in Indonesia. The rapid development of fintech in Indonesia was responded positively by the existence of several regulations issued by the Financial Services Authority (OJK) and Bank Indonesia (BI). Besides conventional fintech, sharia fintech in Indonesia has also begun to develop where the Indonesian Ulema Council (MUI) has issued a fatwa on Sharia-Based Information Technology-Based Financing Services (Fatwa No.117 / DSN-MUI / IX / 2018). Although sharia fintech has begun to develop, OJK has not accommodated the MUI Fatwa to be a binding regulation. This will give an impact on legal uncertainty regarding supervising of sharia fintech. Ironically, both conventional and sharia fintech become a tool of crime related to the misused of consumer personal data unlawfully. To answer the problem, the methodology used of this article is juridical-normative with qualitative approach. The result of this study is although there are some regulations both conventional and sharia fintech, there are still violations of the law that harm consumers such as approval, supervision, law enforcement including violation of consumer personal data and the culture. Those have an impact on legal uncertainty for consumers because there is no legal protection provided by the state.
Keywords: Financial Technology, Personal Data, Consumers and Legal Protection
I. INTRODUCTION
The presence of digital technology in the XXI century has very significant changes in various aspects of human life. One of them is the economic aspect, particularly related to the financial service industry such as financial transaction. If in the previous era people who needs funds must transact directly with the bank or financial institution, now the transaction can be done indirectly through information technology known as financial technology (fintech).
The ease of transaction offered makes fintech developing rapidly in various parts of the world, including in Indonesia. Based on data from the Association of Indonesian Fintech (Aftech), currently in Indonesia exist 135 fintech companies consisting of five types of services (payment, capital market, insurance, market profesioning, and peer to peer lending). From five types of fintech services, peer to peer lending is the majority with 52 companies. While from 135 fintech companies, there are 44 sharia fintechs. 50 fintech company have been registered at OJK and only 1 has registered as Sharia Fintech Organizer (1).
The rapid development of fintech in Indonesia is responded enthusiastically by the Financial Services Authority (OJK). As a regulator, OJK supports the growth of fintech because it contributes to the national economy. For this reason, OJK has issued OJK Regulation Number 77 / POJK.01 / 2016 about Information Technology Based Lending and Borrowing Services. In addition, BI has also issued a Regulation and Regulatory Sandbox namely PBI Number 12/12/2017 on the Implementation of Fintech, Regulation of Members of the Board of Governor (PADG) Number 19/14/PADG/2017 on the Testing System (Regulatory Sandbox) and PADG Number 19/15/PADG/2017 on Registration, Public Information and Monitoring of the Fintech Implementation.
As the biggest moslem country population, sharia fintech is also developing in Indonesia.
This is a response because conventional fintech implements a system of interest including
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usury that is forbidden in Islam. Therefore, the presence of sharia fintech that free from interest transaction is a necessity for Muslims in Indonesia.
Currently, there are 41 sharia fintech companies in Indonesia who are the members of the Indonesian Sharia Fintech Association (AFSI). Internationally, the organizing of sharia fintech in Indonesia is in the 3rd ranking on the world after Malaysia in the first ranking followed by Britain in the second ranking (2).
The development of sharia fintech in Indonesia is responded rapidly by the Indonesian Ulema Council (MUI) by issuing fatwa on Sharia Financing Services Based on Information Technology (Fatwa No. 117/ DSN-MUI/IX/2018). Based on the fatwa, the implementation of sharia fintech must apply the principles of sharia, which may not contain elements of usury, fraud, gambling, misleading information, hazard, torture, and forbidden. However, the problem is that the DSN-MUI fatwa has not yet been accommodated by the OJK to be state law.
OJK Regulation Number 77/POJK.01/ 2016 is only addressed for conventional fintech so that there is no specific regulation for sharia fintech from OJK. Sharia fintech still uses conventional fintech regulation. This means that sharia fintech in Indonesia still has minimum regulation so that the state has not yet provided legal protection for consumers.
Not only from regulation, fintech also has not provided legal protection from other aspects such as approval coordination. Several state institutions are unable to overcome the presence of illegal fintech that is difficult to be eradicated. This will bring ineffective supervision by state institutions and sharia supervisors.
In addition, law enforcement by the police faces many obstacles related to the misuse of personal data because there are no specific rules to regulate illegal fintech. Finally, aspect of the consumptive culture of people to borrow money and the lack of literacy of legal fintech become other problems in sharia fintech.
II. LITERATURE REVIEW
There are several previous studies that had analyzed and discussed related to fintech:
First, Euis Amalia and Indra Rahmatullah in "Strategic Alliances between Sharia Microfinance Institution and Financial Technology in Strengthening Small Micro Enterprises for Socio Economic Justice" (3). This article discussed the benefit of using sharia fintech on financial inclusiveness for Micro, Small and Medium Enterprises (MSME). One of the example is Fintech Ammana which provides services to SMEs in sharia financing scheme. However from the legal aspect, this article only analyzed the aspect of consumer protection in fintech.
Second, Surianom Miskan, Farah Mohd Shahwahid, and Nawal Binti Sholehudin in
"Catching The Fintech Wave in Islamic Finance: Regulatory Approach for Malaysia".
This article discussed the regulation related to the implementation of fintech in Malaysia so that the scope is very limited (4).
Third, Arner, Janos and Buckley in "The Evolution of Fintech: A New Post - Crisis Paradigm". This article described the development of fintech after the economic crisis.
The role of technology becomes important when the financial industry is faced difficulties in reaching the middle and lower market segments (5).
Fourth, Posma Sariguna Johnson Kennedy in "Challenges to the Destructive Threats of Financial Technology and the Government's Role in Addressing It". This article reviewed the reason and caused of fintech practices developing rapidly in Indonesia. In addition, the state in this case of Bank Indonesia has a major role in controlling and monitoring fintech practices. Therefore, Bank Indonesia has established the BI-FTO (BI Fintech Official) as
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an effort to make balanced and proportional regulation without stop the innovation and fintech actors ().
Fifth, Aqida Arsi Suwarsih in "Identification of Potential New Customers of Sharia Banks From Customer Switching Intention." This article explained that prospective customers in the banking segment on determining and deciding the choice of the transaction with banks determined by their behavior (consumer behavior) which is influenced by consumer behavior. One of the factors the desire to find the best and profitable (consumer switch intension) is technological aspect. In this case, Islamic fintech is one of the dominant factors that cause customers to move to the institutions that operate Islamic fintech. The articles above do not discuss the aspect of legal protection related to sharia fintech deeply.
Therefore, research on sharia fintech legal protection is still needed.
III. METHODOLOGY
The type of research used to analyze the problem is normative research with statutory approach, conceptual approach, and case approach. This study uses the theory of legal protection and the legal system. Legal protection according to Satjipto Raharjo is to provide protection for human rights that are harmed by others and the protection is given to the community so that they can enjoy all the rights provided by law (6, p. 5). Legal protection is divided into 2 types: preventive and repressive protection. Preventive protection is the protection provided by the government with the aim to prevent before violation occurs through legislation. While repressive protection aims to resolve the disputes (7, p. 2). While the legal system theory uses the concept from Lawrence M.
Friedman. The legal system consists of 3 aspects: legal substance, legal structure, and legal culture. Legal substance includes legal material identics with law and regulation.
Legal structure, including various organizations and institutions that support the organization. While legal culture is related to belief, value, idea and expectation (8, p. 8- 10).
IV. RESULT AND DISCUSSION Financial Technology Phenomenon
Around 2014, the term Financial Technology (Fintech) began to be used widely as reference for the entry of technology tools, platforms, and ecosystems that made financial service or product more accessible, efficient, and affordable. Although the use of the term fintech is relatively new, in the financial industry such as banks has adopted technology such as the introduction of Automatic Teller Machines (ATM) since 1967. Today, ATMs also includes financial service based on information technology (digitization) where all services use Internet Network.
Financial technology (fintech) is a form of innovation from financial services that most of its activities rely on the advancement of information technology, especially the internet of things where innovation has an impact in connecting financial service providers based on financial technology (fintech service providers) with corporate or business customers (business to business) and individual consumers (business to customer) (9, p. 1-2). The National Digital Research Center (NDRC) in Dublin, Ireland, defines fintech as innovation in financial services or innovation based on information technology (modern technology) as the innovation in the financial sector (10, p. 1).
The term fintech in Indonesia is identic with the application of fintech peer to peer lending or online loan that operate conventional and sharia practices. Based on OJK data on May 15, 2019, there are 127 start-up fintech companies registered at OJK. From 127 fintech companies, there are only 9 registered sharia fintech companies, including PT.
Ammana Fintech Sharia.
PT. Ammana Fintech Syariah is the first sharia fintech company in Indonesia that operates peer-to-peer (P2P) lending investment platforms with sharia format. Through the
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application provided, the public can fund digitally by investing to develop Medium Financial Enterprises (UKM) through Sharia Microfinance Institutions (LKMS) and BMT/Sharia Cooperatives and waqf for mosque, hospital, tahfidz house, boarding school, community boat, public wells, productive rice field for the continuation of the pesantren tahfidz and other social activities. Besides funding application provided as financiers for investment purposes, PT. Ammana also provides funding applications for the purpose of Waqf as the support.
There is also the Sharia Business Unit (UUS) of PT. InvesTree as a fintech company that has the mission of the online marketplace. By online market place, UUS PT. InvesTree functions as intermediary people who need funding (lenders) with people who are willing to lend their funds (borrowers). Unlike PT. InvestTree which operates conventionally, the Syariah Business Unit of PT. InvesTree operates in sharia scheme and uses sharia contract with profit-sharing system.
The Regulation of Fintech Sharia in Indonesia
The regulation of operational fintech sharia in Indonesia still refers to regulation from OJK, Bank Indonesia (BI), and DSN-MUI fatwa. OJK and BI regulate fintech generally, there is no OJK or BI regulation that specifically manage sharia fintech. The legality of sharia fintech is still regulated by DSN-MUI fatwa and OJK conventional fintech regulation as legality for sharia fintech companies.
OJK, BI and DSN-MUI fatwa that regulate sharia fintech are POJK Number 77 /POJK.01/2016 about Information Technology Lending and Borrowing Services. This POJK specifically regulates fintech for Peer to Peer (P2P) Lending services, POJK Number 13 / POJK.02 / 2018 about Digital Financial Innovation in the Financial Services Sector, POJK Number 12 /POJK.03/2018 about Providing Digital Banking Services by Commercial Banks, Bank Indonesia Regulation Number 19/12 / PBI / 2017 about the Implementation of Financial Technology, National Sharia Board Fatwa No. 116 / DS- MUI.IX / 2017 about Sharia E-Money and peer-to-peer lending, and the National Sharia Council Fatwa Council (DSN-MUI) Fatwa Number 117 DSN MUI / II / 2018 about Sharia Financing Services Based on Information Technology issued by the MUI National Sharia Board (DSN).
The fatwa on sharia financing services based on information technology is the financial service based on sharia principles that connect financing providers with financing recipients in the context of financing agreement through an electronic system using the internet network. The contract used by the parties in providing information technology- based financing services can be in the form of agreement that in line with the characteristic of financing services, including al-bai' contract, ijarah, mudharabah, musharakah, wakalah bi al ujrah, and qardh.
Specifically for virtual money such as Bitcoin in Cryptocurrency, Bank Indonesia and OJK prohibit it because of the high speculation caused by the virtual currency. Because all transactions have been recorded in the decentralized system, this application does not require BI to regulate and supervise its operations so that it is difficult to hold the liability of the parties in case of any violations.
There is legal vacuum related to sharia fintech regulation that causes legal uncertainty for users of sharia fintech service: First, the DSN Fatwa on sharia fintech does not include in the hierarchy of state regulation in Indonesia as stated in Law Number 12 of 2011 about The Making of Laws and Regulations. The MUI DSN fatwa is still considered as legal
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doctrine and cannot be categorized as the legal binding norm unless the fatwa formulated in the legislation process to become national or state law (11).
Second, there is legal vacuum because there is no law to regulate specifically sharia fintech. Sharia Fintech is not the same substantially as conventional fintech. These differences include elements of usury, fines, and interest so that sharia fintech is not appropriate if the regulation is still referred to as conventional fintech because they are conceptually different. The Chairperson of the Indonesian Sharia Fintech Association (AFSI) confirmed that sharia fintech is still isolated because it has not yet regulated by OJK. Therefore, sharia fintech should be regulated in special regulation due to its characteristics.
Third, sharia compliance. All transactions of goods and services in sharia fintech may not violate sharia values such as usury and interest. Therefore, we need sharia supervisors who are tasked to ensure all activities in sharia fintech in accordance with sharia values.
The absence of sharia supervisors who monitor the fintech will cause the guarantee of sharia values failed.
Violation of the Law on Fintech Sharia
Generally, the regulation of fintech in Indonesia is still in crucial problem. One of the problem is the protection of personal data for consumers or users of both conventional and sharia fintech as a result of technological development that cannot be dammed. Today cyberspace has become virtual battleground due to the development of technology that is misused by various interest groups such as individuals, business entities, and the state.
The form of deviation from technological development is the issue of cyber security.
IT Governance noted that in the first quarter of 2019 there had been at least 1.769.185.063 cases of personal data cases and cyberattacks worldwide (IT Governance, 2019) with an average loss at least US $ 3.86 million for each lost or stolen data which contains sensitive and confidential information according to 2018 IBM study (IBM, 2018). While in Indonesia according to the National Siber and Sandi Agency (BSSN) from January to June 2018, there were at least 143.4 million cyber-attacks which 1,355 cases were reported by public (12, p. 5).
According to Jeany Sirait's statement, the Jakarta Legal Aid (LBH) until September 2019 has received around 4500 complaints as victims of fintech both registered and unregistered by OJK (legal and illegal). The irony is conducted by fintech both conventional and sharia companies. While the most reported type of fintech is Peer to Peer lending but there are also several other types such as crowdfunding. 4,500 complaints came from 79 applications which 29 of them are registered and unregistered applications from OJK. This means that fintech violation is not only done by unregistered applications but also registered applications (13).
LBH Jakarta found several types of violations committed by fintech both legal and illegal companies:
1) Retrieval of personal data in the form of contact numbers, SMS, calls, memory cards, etc on the consumer/borrower's phone. This condition will occur if the consumer/borrower is late to pay his debt or does not pay a debt, then the fintech provider will steal all the numbers consumer/borrower contact directly by the system.
2) Billing is done by contacting the names on the contact who know the borrower. The provider will contact to all partners, parents, close friends and others who know the borrower whereas they dont know exactly what the borrower doing.
3) Billing is done by humiliating, cursing, threatening, slandering, and sometimes sexual harassment.
4) Billing is done before the due date and done anytime.
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5) Loan interest is very high and unlimited.
6) Complaint numbers of fintech provider are not always available.
7) The fintech company address is unclear.
8) Online loan application change names without notice to consumers/borrowers for days but interest on loans during the name change process continuing.
The violation occurs because there is no specific regulation that protects personal data in Indonesia so that violation against fintech users are still ongoing. Therefore, the legal risk on fintech development must be anticipated such as transaction security, data, and financial systems so that fintech does not harm the society (14).
Aware of the risks, many countries in the European Union (EU) the concept of personal data protection known as the General Data Protection Regulation (GDPR) principles. The GDPR regulates the processing of personal data of each individual conducted by individuals, companies, organizations for both commercial and professional interest (Regulation (EU) 2016/679, 2016: 1).
According to Sonny Zulhuda, the regulation of personal data protection is very important because we are in the era of the industrial revolution 4.0 including fintech. The main problem of the importance of the regulation is the protection of personal data that is misused such as geolocation data, phone books and recycle data by irresponsible people who use it for other purposes. At least there are 4 parties who will always look for our data: a. Big brothers: government authority b. Big data aggregator: someone hunts data for commercial purposes, c. Big Fans: fans and haters and d. Malice: someone aims to do somethings for a specific subject (15).
Therefore, the need for personal data protection regulation becomes something very urgent so that personal data can be stored and used legally according to the law of the principles of data protection. The principles of data protection are: a. personal data obtained legally, b. the data collected is accurate, correct and complete, c. the data owner is notified related to the use of data and what their rights are, d. the data owner is given the choice in doing the rights, e. personal data is not accessed/shared to the third parties without permission, f. personal data is secured by the data user, g. Personal data is stored when not used and h. the data owner has the right to access and correct the data (16).
Despite the urgency of the regulation of personal data protection in Indonesia, there are no specific regulation about the protection of personal data and is still segmented in various regulations including Article 26 of Law Number 11 of 2008 of Information and Electronic Transaction (ITE), Law Number 43 of 2009 of Archiving, Law Number 8 of 1997 of Company Documents, Law Number 10 of 1998 of Amendments to Law Number 7 of Year 1992 of Banking specifically regarding bank secrecy, Law Number 36 of 2009 of Health, Law Number 36 of 1999 of Telecommunications (Telecommunications Law), and Law Number 24 of 2013 of Amendments to Law Number 23 of 2006 of Population Administration.
The protection of personal data is also stated in the Minister of Communication and Information Regulation Number 20 of 2016 of the Protection of Personal Data (PDP).
OJK also regulates through POJK Number 77/POJK.01/2016 of Information Technology Lending and Borrowing Services. The latest development today, the Parliament and the Government have been drafting the Law of Protection of Personal Data in National Legislation Program 2020 which in fact the draft has started to be drafted since 2012.
However, all regulations related to personal data protection have not been able to provide legal protection for fintech users because several factors: First, OJK in conducting supervision and monitoring of the fintech organizers is legally constrained. OJK is limited only to supervise on registered fintech in OJK, while those not registered are not included
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as an object of supervision as stated in Article 17 paragraph (1) of the OJK Law.
According to Jeany Sirait, juridical factor should not be used as an excuse if refers to Article 4, 5, 6 of the OJK Law, OJK has responsibility for all financial services, both legal and illegal. Therefore, the OJK must come out of juridical constraint and make a policy systematically rather than reactive action so that OJK more pro to the victims of illegal fintech (17). This condition must be overcome because violation of the law is conducted by registered and unregistered fintech so that there is a legal vacuum regarding who is supervising the unregistered fintech (illegal).
Second, the POJK does not regulate dispute resolution mechanism and criminal sanction as a preventive and repressive effort for fintech organizers. In POJK the sanction imposed are a. written warning; b. fines (the obligation to pay a certain amount of money); c.
cancellation of approval; and/or d. cancellation of registration. LBH Jakarta ever asked clarification from the OJK regarding the online loan case dispute resolution mechanism.
At that time, OJK responded by stating that if there is a dispute it is returned to POJK 77 of 2016. In fact, there is no dispute resolution mechanism on POJK 77 (18). This should not happen because one of the legal function is a tool for dispute resolution. This function is binding to the law in order the community is order and there is no vigilante action.
Therefore, the role of the dispute resolution mechanism is very important in the financial industry which must be regulated by the OJK.
Supervising of Sharia Fintech in Indonesia
There are 3 state institutions and 1 independent institution that responsible for supervising sharia fintech in Indonesia: the Financial Services Authority (OJK), Bank Indonesia, the Ministry of Communication and Information Technology and the Indonesian Ulema Council (MUI). OJK supervises Peer to Peer Lending and crowdfunding. Bank Indonesia supervises fintech in the type of payment. The Ministry of Communication and Information Technology supervises e-commerce and digital signatures while the MUI supervises the sharia aspects.
Through supervision, legal protection of sharia fintech services should be overcome because it is conducted by state institutions such as OJK, Bank Indonesia, Ministry of Communication and Information and MUI (as an independent institution). However, the supervision conducted by them have not been effective. It is based on several facts as follows: the implementation of fintech involves many parties (stakeholders) that caused ineffective coordination between institutions. For example, a fintech company that will begin operation must apply a permit from the Ministry of Law and Human Rights. When fintech wants to open a service application, it must ask permission from the Ministry of Communication and Information and fintech which serves financial needs request permission from the Financial Services Authority (OJK) to be legal and official. The number of these institutions will cause the difficulty of coordination and overlapping rules between state institutions with their own authorities.
However, the protection of personal data is over-regulation because issued by each institution and does not have comprehensive laws related to the protection of personal data. It can be seen that the personal data regulations are issued by the FSA, the Ministry of Communication and Information, the Ministry of Home Affairs and other institutions.
Therefore, the regulation of fintech in Indonesia is still partial in several laws and regulations issued by state institutions based on its authorities so that the regulation potential overlapping horizontally and vertically.
According to Bimo Setyo Anggoro, because of partial regulations making difficulty for the Police to enforce the law against fintech criminals in determining the subject or object of a criminal act. Therefore, it is very necessary to have a special law on fintech in Indonesia besides the Personal Data Protection law which must be finished immediately.
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Tongam L Tobing also agrees that there should be a special rule or law governing fintech because OJK regulation is very limited because of no criminal sanction (19).
Second, the coordination mechanism between state institutions to supervise illegal fintech is not effective. According to Jeany Sirait, coordination does not work effectively because LBH Jakarta until August 2019 is still receiving around 4500 complaints from victims of legal and illegal fintech. One of the concerns to be supervised by OJK and Ministry of Communication and Information as reported by LBH Jakarta is to suspend or eradicate illegal fintech that appears more and more on the internet through the Google Playstore and Appstore application that is used widely by the public (20).
On the other hand, according to Tongam Tobing, OJK has been trying continuously to request Google in removing illegal fintech in Google Playstore or Appstore. However, it is not successful fully because Google cannot remove them massively because they enter Google every day with around 1,000,000 new applications requested to be uploaded on Google so that it is impossible to supervise them individually. Nowdays, the authority to request Google for removing illegal fintech is under Ministry of Communication and Information Technology which was previously the responsibility of the OJK. (21). It makes difficult for law enforcement to prevent illegal fintech that potential to harm community who can download easily for free through their smartphones.
Third, the infrastructure is inadequate. To eradicate illegal fintech, the Government has formed Task Force called “Satgas Waspada Investasi”. The Task Force consists of Ministry of Communication dan Information , OJK, and other institutions with a total of 13 institutions that have own authorities. Ironically, from 13 state institutions in the Task Force only 6 persons who work and supervise effectively on fintech problems. Moreover, the budget of the task force “Satgas Waspada Investasi” is also limited to supervise the number of fintech companies from all over Indonesia (22).
Fourth, for supervision sharia fintech besides OJK, BI, Ministry of Information and Communication, there is the role of MUI to ensure sharia compliance of fintech companies. However, there is no specific regulation related to sharia fintech, sharia compliance mechanism is conducted by Sharia Legal Officer such as PT. Ammana Fintech as an example. The role of sharia legal officer has been conducted by PT.
Ammana Fintech before starting operation and submitting registration to the OJK.
Therefore, the supervision of sharia fintech has not been optimal when it is compared the duty and authority of the board of sharia trustee in sharia bank institution (23). The condition causes the supervision of illegal fintech ineffective which has claimed many victims at LBH Jakarta. However, OJK supervises closely legal fintech in every stage of operation.
Law Enforcement of Sharia Fintech Violation in Indonesia
The negative impact of technological development in the era of disruption is the emergence of cyber crime. According to Setyo Bimo Anggoro, cyber crime appears as reaction from technological civilization. Types of cybercrime in fintech are tapping data, spreading personal data, sending pornographic images, threatening and manipulating data (24). The police gets the problem to enforce illegal fintech so that complaints received by the police are not to be followed by an investigation. For example, if there is a victim of illegal fintech, the police difficult to identify whom the accused, when and where the crime occurred (locus and tempus). It is because illegal fintech cannot be identified who is the accused in determining Mens Rea and Actus Reus (25).
On the other hand, if there is legal fintech violating the law, the police can investigate because it is clearly registered at the OJK. The victim who feels his rights have been violated can report to the Police. If the victim is threatened because of the debt in legal fintech, then it can be reported at any police office because it includes general crime.
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However, if intimidation by threats, the distribution of personal data and sexual harassment through the phone, the victim should report to the Cybercrime Unit in the Regional Police Office (26).
Moreover, there is no special regulation about fintech which contains criminal sanction for illegal fintech companies. This rule is still spread out in several types of legislation and issued by various state institutions so that law enforcement against fintech is in gray area causing legal uncertainty. This condition makes the police is not optimal in providing legal protection to society.
The type of violation of personal data is the most violation faced by the victim. According to David Tobing, violation in fintech often occurs related to misuse of personal data, unregistered fintech or unclear legal entity and unclear legal responsibility, billing mechanism accompanied by intimidation, psychological violence, sexual harassment, no disclosure of information, misuse of circumstances/misbruik van omstadigheden: high interest, high fine, and other costs and the standard clauses (27).
Violation of personal data is often done by people when they want to download the fintech application. They will be asked for a personal photos, access to all telephone numbers, location, and file stored on the mobile phones. Ironically, of violating personal data is not only done by the private sector but also by the government in providing services to the public (28).
From that phenomenon, it can be concluded that there are some problems that need to be solved by stakeholders, both conventional and sharia fintech in Indonesia, namely ineffective law enforcement for violation in conventional and sharia fintech institution, not optimal function and authority of sharia supervisor and the absence special regulation for sharia fintech. This problem must be quickly solved by the government so that all levels of people who use fintech getting legal protection.
Culture of Borrowing Money
There are many reasons people to borrow money through peer to peer lending in Indonesia such as economic reason, education, and health guarantee which some diseases are not covered by the state. Usually, the group is someone who cannot access banking services easily (not bankable). Unfortunately, almost 70-73% of those who complain to the OJK are women or mothers who have dual roles, as housewive and worker.
Reason for borrowing money is for consumptive and unproductive needs not for productive matters based on urgent and basic needs. Moreover, they are also using illegal fintech because they want to avoid the difficulty of legal fintech conditions given by the OJK. It was done because the conditions determined by illegal fintech generally easier than the conditions set by legal fintech. On the other hand, there are also people borrowing money using fintech with good faith. (29).
V. CONCLUSIONS
The phenomenon of the development of fintech especially sharia fintech in Indonesia is peer to peer lending type in start-up and payment company for various features both used by banks and other business entities. There must be specific regulation providing a guideline for both conventional and sharia fintech companies. It is because there is no specific regulation about sharia fintech so it still uses conventional regulation and MUI fatwa.
For the supervision of fintech including sharia fintech in Indonesia is still partial. The role of OJK, BI, Ministry of Communication and Information and other government institutions related to cross-sectoral state institutions in supervising fintech on the internet
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application is not optimal so that illegal fintech still operates without any law enforcement. Besides, the role of sharia supervisor is also not effective because there is no specific regulation about the role and authority of sharia supervisor to ensure sharia fintech services are in accordance with sharia principles.
Whereas for violation of fintech case including sharia fintech the modus is theft of personal data due to the large number of illegal fintech. Violation of the law occurs because there is no comprehensive law related to the protection of personal data making the police difficult to do law enforcement by the police. Fintech violation is also caused by the consumptive culture of the community in borrowing money. Basic needs such as education, health, and others trigger the people for lend the money. Data from LBH Jakarta shows how the culture of borrowing money from society has encouraged illegal fintech company to operate free. Therefore, recommendations to the government as follows:
First, Indonesia needs comprehensive urgently regulation in personal data protection. As long as there is no personal data law, data privacy cannot be protected and there will be more violations of data theft including the use of fintech by the majority of Indonesian people who access the internet. In addition, sharia fintech requires binding regulation that is not only limited to the MUI fatwa but in form of state law that has legal force and strict sanction.
Second, the supervision of fintech operation including sharia fintech should be well- coordinated, supported by the availability of human resources, clear work distribution, adequate infrastructure, and sufficient budget so that law enforcement can be conducted optimally in providing legal protection to the society.
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[7] M. Hadjon, Phillipus, “Perlindungan Hukum Bagi Rakyat Indonesia”, Surabaya: PT.
Bina Ilmu, (1987). p. 2.
[8] M. Friedman, Lawrence, “American Law an Introduction. rev. ed”.; New York, London: W.W. Norton & Company, (1998). p.8-10.
[9] Ernama, Budiharto, Hendro S., “Pengawasan Otoritas Jasa Keuangan Terhadap Financial Technology (Peraturan Otoritas Jasa Keuangan Nomor 77/POJK.01/2016),” Diponegoro Law Journal, Vol. 6, No.3, (2017), p.1-2.
Vol. 29, No. 3, (2020), pp. 3086- 3097
[10] Wijayanti, “Pelaksanaan Pemberian Kredit Berbasis Tehnologi Informasi oleh Fintech kepada Pelaku UKM,” Faculty of Law University Muhammadiyah Surakarta Indonesia, (2018), p.1.
[11] Amin, Maruf, “Solusi Hukum Islam (Makharij Fiqhiyyah) Sebagai Pendorong Arus Baru Ekonomi Syariah di Indonesia (Kontribusi Fatwa DSN MUI Dalam Perundang- undangan RI)”, UIN Maulana Malik Ibrahim, Malang Indonesia, Ministry of Religius Affairs, (2017).
[12] Djafar, Wahyudi Lintang Setianti dan Alia Yofira Karunian, “Mengembangkan Pendekatan Berbasis HAM Dalam Kebijakan Keamanan Siber: Mencari Distingsi Rezim Keamanan dan Kejahatan Siber”, ELSAM, Jakarta, (2019), p. 5.
[13] Sirait, Jeany. Interviewed. Tuesday, October 08 2019 at LBH Jakarta.
[14] Zulhuda, Sonny. Interviewed. International Islamic University Malaysia (IIUM), September 01 2019.
[15] Zulhuda, Sonny. Perlindungan Data Dalam Konteks Hukum Siber di Era Disrupsi, Pulic Lecture at Faculty of Sharia and Law UIN Syarif Hidayatullah Jakarta.
Monday, October 07 2019.
[16] Zulhuda, Sonny. Perlindungan Data Dalam Konteks Hukum Siber di Era Disrupsi, Pulic Lecture at Faculty of Sharia and Law UIN Syarif Hidayatullah Jakarta.
Monday, October 07 2019.
[17] Sirait, Jeany. Interviewed. Tuesday, October 08 2019 at Jakarta Legal Aid Office (LBH Jakarta).
[18] Sirait, Jeany. Interviewed. Tuesday, October 08 2019 at Jakarta Legal Aid Office (LBH Jakarta).
[19] Bimo Setyo Anggoro. Berpotensikah Anda Menjadi Korban? Bersama Satgas Waspada Investasi: Jauhi Jerat Utang Fintech Illegal. Public Duscussion held by Indosterling Forum, Wednesday October 16 2019.
[20] Tobing, Tongam L. Berpotensikah Anda Menjadi Korban? Bersama Satgas Waspada Investasi: Jauhi Jerat Utang Fintech Illegal. Public Duscussion held by Indosterling Forum, Wednesday October 16 2019.
[21] Tobing, Tongam L. Berpotensikah Anda Menjadi Korban? Bersama Satgas Waspada Investasi: Jauhi Jerat Utang Fintech Illegal. Public Duscussion held by Indosterling Forum, Wednesday October 16 2019.
[22] Tobing, Tongam L. Berpotensikah Anda Menjadi Korban? Bersama Satgas Waspada Investasi: Jauhi Jerat Utang Fintech Illegal. Public Duscussion held by Indosterling Forum, Wednesday October 16 2019.
[23] Haddad, Umar. Interviewed Sharia Supervisor Board PT. Ammana on October 17 2019.
[24] Bimo Setyo Anggoro. Berpotensikah Anda Menjadi Korban? Bersama Satgas Waspada Investasi: Jauhi Jerat Utang Fintech Illegal. Public Duscussion held by Indosterling Forum, Wednesday October 16 2019.
[25] Bimo Setyo Anggoro. Berpotensikah Anda Menjadi Korban? Bersama Satgas Waspada Investasi: Jauhi Jerat Utang Fintech Illegal. Public Duscussion held by Indosterling Forum, Wednesday October 16 2019.
[26] Bimo Setyo Anggoro. Berpotensikah Anda Menjadi Korban? Bersama Satgas Waspada Investasi: Jauhi Jerat Utang Fintech Illegal. Public Duscussion held by Indosterling Forum, Wednesday 16 October 2019.
[27] David Tobing. Berpotensikah Anda Menjadi Korban? Bersama Satgas Waspada Investasi: Jauhi Jerat Utang Fintech Illegal. Public Duscussion held by Indosterling Forum, Wednesday October 16 2019.
[28] David Tobing. Berpotensikah Anda Menjadi Korban? Bersama Satgas Waspada Investasi: Jauhi Jerat Utang Fintech Illegal. Public Duscussion held by Indosterling Forum, Wednesday October 16 2019.
[29] David Tobing. Berpotensikah Anda Menjadi Korban? Bersama Satgas Waspada Investasi: Jauhi Jerat Utang Fintech Illegal. Public Duscussion held by Indosterling Forum, Wednesday October 16 2019.
Vol. 29, No. 3, (2020), pp. 3086- 3097
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AUTHORS PROFILE
Nurhasanah, Graduated from Doctoral Program Syarif Hidayatullah State Islamic University Jakarta Indonesia. Her expertise is in Islamic Economic Law and teaches Islamic Economic Law, Sharia Banking Law, Company Law, and Islamic Capital Market Law. She writes many articles both national and international journal..
Indra Rahmatullah, Graduated from Magister Program Faculty of Law University of Pancasila Jakarta Indonesia. His expertise is in business law especiallly Anti Trust Law, Labour Law and Legal Philosophy. He writes many articles both national and international journal.
