Indonesia’s AML/CFT System Raises Concerns Over Effectiveness
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The Bank of Indonesia (BO) has raised concerns over the effectiveness of Indonesia’s anti-money laundering and counter-terrorism financing (AML/CFT) system due to a relatively low number of BO registrations.
Strengths of Indonesia’s AML/CFT System
Indonesia has a strong legal framework for international cooperation and has entered into numerous bilateral and multilateral agreements for providing and seeking mutual legal assistance (MLA) and extradition. Additionally, the country is effective in some areas, such as:
- Understanding ML/TF risks facing the country
- Using financial intelligence for investigations
- Cooperating domestically and internationally
Weaknesses of Indonesia’s AML/CFT System
However, there are major improvements needed, including a more robust approach to identifying and assessing internal geographical risks across different provinces. Furthermore:
- There is no written strategy in relation to proceeds of crime (PF) coordination.
- A significant number of reporting entities are not yet registered with the goAML system, which may limit the financial intelligence available to the Financial Intelligence Unit (PPATK).
Concerns and Calls for Action
A senior official at the country’s central bank acknowledged that while Indonesia has made significant progress in implementing its AML/CFT regime, there is still much work to be done to ensure that the system is effective and robust enough to address the risks posed by money laundering and terrorist financing.
Anti-corruption groups have welcomed the report’s findings and called for greater efforts to combat financial crime in Indonesia. Transparency International spokesperson urged the Indonesian government to take concrete steps to address these issues and ensure that its AML/CFT system is effective and robust enough to protect the country’s financial integrity.
Conclusion
Indonesia’s AML/CFT system has made significant progress, but there are still concerns over its effectiveness. To address these concerns, Indonesia must implement a more robust approach to identifying and assessing internal geographical risks, establish a written strategy for proceeds of crime coordination, and ensure that all reporting entities are registered with the goAML system.