Financial Crime World

Indonesia’s Financial Regulator Issues New Regulation on AML-CFT and CPF Program

Strengthening Integrity in Financial Services Sector

The Indonesian Financial Services Authority (OJK) has issued a new regulation aimed at enhancing the integrity of the financial services sector by implementing anti-money laundering (AML), counter-terrorist financing (CFT), and countering proliferation financing of weapons of mass destruction (CPF) programs. This regulation replaces previous regulations, including POJK No. 12/POJK.01/2017 and its amendments, to mitigate emerging risks related to money laundering, terrorist financing, and weapons of mass destruction proliferation financing.

Key Provisions

The new regulation includes several key provisions:

  • Extending AML-CFT and CPF program implementation requirements to trusts, securities crowdfunding, financial technology (FinTech) or digital financial innovation firms, and other types of financial institutions required by law.
  • Mandatory assessment, policies, and procedures for proliferation financing, as well as reporting suspicious transactions related to proliferation financing.
  • 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).
  • Requiring financial institutions to prepare and submit individual risk assessments (IRAs) and conduct customer due diligence (CDD), including simplified CDD for low-risk areas.
  • Designating additional countermeasures against high-risk jurisdictions listed in FATF publications.
  • Revising requirements and procedures for engagement between financial institutions and third-party providers, as well as compliance management functions, independent internal audits, and pre-employee screening procedures.

Commitment to International Principles

The regulation aligns with international principles, such as those issued by the Financial Action Task Force on Money Laundering (FATF), Indonesian laws and regulations, and technological developments that must ensure security and confidentiality. The regulation also demonstrates OJK’s commitment to supporting Indonesia’s aspiration to become a full member of the FATF.

Transition Period

Financial institutions have been given a maximum transition period of six months from the issuance of the regulation to make necessary adjustments.

Conclusion

The new regulation aims to strengthen the integrity of the financial services sector in Indonesia by implementing AML-CFT and CPF programs. The regulation is designed to mitigate emerging risks related to money laundering, terrorist financing, and weapons of mass destruction proliferation financing, and aligns with international principles and Indonesian laws and regulations.