Indonesia Strengthens Anti-Money Laundering Policies in Face of Technological Advancements
In response to emerging risks posed by money laundering, terrorist financing, and proliferation financing, Indonesia’s financial regulator, OJK, has issued a new regulation requiring financial institutions to implement anti-money laundering (AML), counter-terrorist financing (CFT), and counter-proliferation financing of weapons of mass destruction (CPF) programs.
Strengthening AML Framework
The new regulation replaces an earlier one and aims to address the emerging risks of money laundering, terrorist financing, and proliferation financing. The OJK’s move is seen as a significant step forward in Indonesia’s efforts to strengthen its AML framework and align with international standards set by the Financial Action Task Force on Money Laundering (FATF).
Key Requirements
- Financial institutions must adopt a risk-based approach to AML compliance, involving assessing the risk posed by individual customers and clients.
- Appropriate customer due diligence measures are required to identify high-risk customers and screen them against international sanctions, adverse media, and politically exposed persons lists.
Consequences of Non-Compliance
Financial institutions failing to comply with these regulations could face severe penalties, including:
- Fines
- Revocation of licenses
Regulation in the Cryptocurrency and Digital Payment Sectors
Indonesia’s efforts to address AML in the cryptocurrency and digital payment sectors are also noteworthy. The country has taken steps to regulate cryptocurrencies, requiring exchanges to register with the Commodity Futures Trading Regulatory Agency (Bappebti) and conduct customer due diligence to ensure compliance with AML standards.
- Cryptocurrency exchanges and digital payment service providers are subject to reporting obligations similar to traditional financial institutions.
- Entities offering cryptocurrency and digital payment services must conduct customer due diligence to verify the identity of their customers.
Promoting Technological Solutions
Indonesia encourages the use of technological solutions for AML compliance in the cryptocurrency and digital payment sectors, such as blockchain analytics tools.
Enforcement of Regulations
The country’s authorities have demonstrated their commitment to enforcing AML regulations within the cryptocurrency and digital payment sectors. Violations result in penalties, fines, or the revocation of licenses.
Conclusion
Indonesia’s proactive approach to addressing the challenges posed by technological advancements within its AML framework is a significant step forward for the country. By regulating these technologies, imposing reporting obligations, conducting customer due diligence, and promoting a risk-based approach, Indonesia seeks to strike a balance between innovation and AML compliance, ultimately contributing to the integrity of its financial system.