Financial Crime World

Indonesia’s Financial Intelligence Units Make Strides Against Money Laundering and Terrorism Financing, but More Effort Needed

Jakarta, Indonesia

Indonesia has been commended by the global anti-money laundering body, the Financial Action Task Force (FATF), for its strong legal framework in tackling money laundering and terrorist financing. However, the country still faces significant challenges in recovering assets, implementing risk-based supervision, and imposing effective sanctions.

Strengths

  • Indonesia’s financial intelligence units are producing high-quality information that is helping law enforcement agencies investigate and prosecute money laundering and terrorist financing cases.
  • The country has made good progress in international cooperation, particularly in informal exchanges on time-sensitive terrorism and terrorist financing cases.

Challenges

Improving Financial Intelligence

  • Indonesia’s Financial Intelligence Unit (FIU) needs to improve its understanding of different types of money laundering activities and ensure that criminals are permanently deprived of their ill-gotten gains, particularly those located abroad.
  • The FIU should focus on producing timely and targeted financial intelligence that aids investigations into money laundering and other financial crimes.

Enhancing Terrorist Financing Detection and Prosecution

  • Indonesia has made significant progress in detecting, investigating, and prosecuting terrorist financing cases, including the return of foreign terrorist fighters and de-radicalization efforts.
  • However, the country still needs to improve its understanding of the risk of abuse of its non-profit sector for terrorism financing and take proportionate measures without disrupting legitimate charitable activities.
  • The FATF assessment identified gaps in Indonesia’s legal framework for targeted financial sanctions on proliferation financing, which the country is working to address.
  • Strengthening this framework will help ensure that criminals are held accountable for their crimes and that assets are recovered effectively.

Conclusion

While Indonesia has made significant strides in combating money laundering and terrorist financing, more effort is needed to strengthen its financial intelligence units and ensure that criminals are held accountable for their crimes. The country must continue to improve its understanding of different types of money laundering activities, enhance its detection and prosecution of terrorist financing cases, and address gaps in its legal framework.