Financial Crime World

Indonesia Strengthens Financial Sector Integrity with New AML-CFT Regulation

Jakarta, June 16, 2023

The Indonesian Financial Services Authority (OJK) has issued a new regulation to enhance the integrity of the financial services sector by implementing anti-money laundering (AML), counter-terrorism financing (CFT), and countering proliferation financing of weapons of mass destruction (CPF) programs.

Background

The OJK Regulation No. 8 of 2023 replaces POJK No. 12/POJK.01/2017, as amended by POJK No. 23/POJK.01/2019. The new regulation aims to mitigate the emerging risks of money laundering, terrorist financing, and proliferation financing, which pose a significant threat to the country.

Key Provisions

The key provisions of the regulation include:

  • Extended Coverage: Extending the requirement for implementing AML-CFT and CPF programs to trust companies, securities crowdfunding, fintech or digital financial innovation firms, and other types of financial institutions under OJK jurisdiction.
  • Strengthened Proliferation Financing Regulations: Strengthening proliferation financing regulations, including mandatory assessments, policies, and procedures, suspicious transaction reports, and sanctions on PF violations.
  • Professional Registration: Requiring financial institutions to ensure that supporting professionals have implemented AML, CFT, and CPF programs and are registered in GoAML, the information system for reporting managed by PPATK (the Indonesian Financial Intelligence Unit).
  • Individual Risk Assessments: Mandating individual risk assessments (IRAs) and submitting them to OJK.
  • Countermeasures against High-Risk Jurisdictions: Providing additional examples of countermeasures against high-risk jurisdictions designated in FATF publications.
  • Customer Due Diligence: Reaffirming customer due diligence requirements, including simplified CDD for low-risk areas and the use of passports, KMILN, NIT, and IKD as supporting documents.

Transition Period

OJK provides a six-month transition period for financial institutions to adjust to the new regulations. The authority emphasized that compliance with the regulation is essential to maintain the integrity of the financial sector and prevent illicit activities.

Conclusion

The new regulation aims to strengthen Indonesia’s anti-money laundering and counter-terrorism financing efforts, aligning with international standards and best practices.