Financial Crime World

Indonesia’s Anti-Money Laundering and Counter-Terrorist Financing Efforts Show Promise

Jakarta - Indonesia has made significant strides in its efforts to combat money laundering and terrorist financing (ML/TF), according to a recent assessment by the Asia-Pacific Group on Money Laundering (APG).

Strengthened Framework and Financial Intelligence Gathering Capabilities

Indonesia’s legal, regulatory, and institutional framework is robust, and its financial intelligence gathering capabilities are strong. The country’s risk assessments have identified key areas of concern, including corruption, narcotics, and fraud/economic crime.

  • Indonesia has made progress in investigating and prosecuting ML/TF cases, with a focus on predicate crimes such as corruption and narcotics trafficking.
  • The Financial Intelligence Unit (PPATK) has been commended for its effective use of financial intelligence to support investigations and asset tracing. PPATK produces a wide range of financial intelligence products, including strategic analysis products.

Strong Coordination and Policy-Setting Framework

Indonesia’s strong coordination and policy-setting framework was highlighted in the APG assessment. National policies and objectives are established through national strategies and annual action plans. The National Coordination Committee plays a key role in monitoring and coordinating the AML/CFT system.

Areas for Improvement

However, the assessment identified several areas that require improvement:

  • Supervision: Indonesia needs to strengthen its supervision of financial institutions and designated non-financial businesses and professions (DNFBPs).
  • Implementation of Preventive Measures: The country should improve its implementation of preventive measures, such as customer due diligence and reporting suspicious transactions.
  • Targeted Financial Sanctions: Indonesia should prioritize the confiscation of criminal proceeds, particularly those moved offshore.

Recommendations for Improvement

The APG assessment recommended that Indonesia:

  • Strengthen its risk-based approach for non-profit organizations (NPOs) identified as vulnerable to terrorist financing abuse.
  • Improve its supervision of the DNFBPs sector.
  • Prioritize the confiscation of criminal proceeds, particularly those moved offshore.

Conclusion

While there are areas where Indonesia can improve, the country’s AML/CFT framework shows promise, and its financial intelligence gathering capabilities are among the strongest in the region. With continued efforts to strengthen its AML/CFT system, Indonesia is well-positioned to effectively combat money laundering and terrorist financing.