Inadequate Cryptocurrency Regulations Pose Challenges to Indonesia’s AML Efforts

The use of cryptocurrencies in Indonesia is a complex issue that poses significant challenges to the country’s anti-money laundering (AML) efforts. The lack of specific regulations governing cryptocurrencies and coin mixers makes it difficult for law enforcement agencies to track and investigate money laundering activities.

Anonymity and Coin Mixers: A Challenge to Tracking Money Laundering

The anonymity of cryptocurrencies, which are traded on decentralized exchanges, makes it challenging to identify perpetrators of money laundering. Coin mixers, a service that obscures the origin and destination of transactions, further complicates the process of tracking and tracing cryptocurrency funds.

Indonesia’s Current Regulations: Limited in Scope

Indonesia has adopted the “Travel Rule,” which requires virtual asset service providers to send sender and recipient information to authorized parties when conducting cryptocurrency transactions worth more than USD 1000. However, this regulation is limited in its scope and does not provide a clear legal basis for law enforcement agencies to investigate and prosecute money laundering activities.

Uncertainty and Multiple Interpretations

The absence of specific regulations governing coin mixers makes it challenging to implement law enforcement on this matter. The lack of clarity on the legal basis for investigating and prosecuting money laundering activities through cryptocurrencies creates uncertainty and multiple interpretations.

Economic Policy Challenges: Fluctuating Price of Digital Currency

Furthermore, Indonesia’s economic policies do not influence the fluctuating price of digital currency, making it difficult to maintain its value as a national currency. Cryptocurrencies are considered incapable of fulfilling the security system in the payment system in Indonesia, as proven by fraud and bitcoin theft at Mt.Gox, the world’s largest bitcoin exchange.

Conclusion: Need for Clear Legal Frameworks

In conclusion, the use of cryptocurrencies in Indonesia poses significant challenges to the country’s AML efforts, including the anonymity of transactions, the lack of specific regulations governing cryptocurrencies and coin mixers, and the inability to maintain the value of digital currency as a national currency. To effectively combat money laundering, Indonesia needs to develop clear legal frameworks and regulations that address these challenges.

References:

• Departemen Komunikasi Bank Indonesia (2022). Central Bank Digital Currency (CBDC)
• Kusumaningtyas, D., & Derozari, M. (2019). Cryptocurrency as a payment system in Indonesia
• Nelson, B. (2022). Bitcoin laundry: A method to complicate identifying money laundering through cryptocurrency
• Ridwan, R. (2022). Coin mixer: A service that obscures the origin and destination of transactions
• Sam, et al. (2022). The impact of cryptocurrencies on national currency in Indonesia
• Yustisia Volume 12 Number 2 (August 2023) Inadequate Cryptocurrency and Money Laundering…