Financial Crime World

Indonesia’s Financial Crime Trends and Statistics Revealed: Country Needs to Improve Asset Recovery, Risk-Based Supervision

A recent report from the Financial Action Task Force (FATF) has highlighted Indonesia’s strong legal framework in tackling money laundering and terrorist financing. However, the country faces high risks from domestic crimes such as corruption, narcotics, tax evasion, and forestry crimes, as well as terrorism financing due to the presence of terrorist organizations.

Financial Crime Risks in Indonesia

Indonesia’s financial crime risks are primarily driven by domestic crimes, including:

  • Corruption
  • Narcotics
  • Tax evasion
  • Forestry crimes

Additionally, the country faces risks from terrorism financing due to the presence of terrorist organizations.

FATF Evaluation Report: Strengths and Weaknesses

The FATF mutual evaluation report stated that Indonesia has a good understanding of its financial crime risks and has developed policies and strategies to mitigate them. The country’s three main financial supervisory authorities have proactively developed their anti-money laundering and combating the financing of terrorism (AML/CFT) framework.

However, the report noted several areas for improvement:

  • Risk-based supervision: Indonesia needs to improve risk-based supervision, particularly in the sectors of:
    • Money changers
    • Money or value transfer services
    • Non-financial sector
  • Effective and dissuasive sanctions: The country needs to impose effective and dissuasive sanctions.
  • Ultimate owners’ information: Indonesia needs to ensure that accurate information on the ultimate owners of all companies is available to law enforcement.

Financial Intelligence Unit

Indonesia’s Financial Intelligence Unit provides high-quality financial intelligence to law enforcement agencies for investigations into money laundering, terrorist financing, and other crimes. However, the report suggested that Indonesia should:

  • Improve investigation and prosecution of different types of money laundering activities
  • Ensure permanent deprivation of criminals’ illicit proceeds

Terrorist Financing

Indonesia has been praised for its success in detecting, investigating, and prosecuting terrorist financing cases. Its strategy includes a focus on returning foreign terrorist fighters and de-radicalization.

However, the report urged Indonesia to:

  • Improve understanding of the risk of abuse of its non-profit sector for terrorism financing
  • Take proportionate measures without discouraging or disrupting legitimate charitable activities

Proliferation Financing

The report noted that Indonesia has taken steps to address shortcomings in its legal framework for targeted financial sanctions on proliferation financing. However, some key gaps remain.

Future Plans

Indonesia will continue to work towards fulfilling the FATF’s membership requirements.