Financial Crime World

Global Financial Crime Trends in Indonesia Worry Experts

Indonesia has made significant strides in combating global financial crime trends, but experts warn that the country must continue to improve its Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) framework.

Improving Asset Recovery, Risk-Based Supervision, and Proportionate Sanctions

According to a recent report by the Paris-based Financial Action Task Force (FATF), Indonesia’s domestic crimes such as corruption, narcotics, tax evasion, and forestry crimes pose significant money laundering risks. The country also faces high terrorism financing risks due to the presence of terrorist organizations and their supporters.

Key Challenges:

  • Improving asset recovery for money laundering cases
  • Enhancing risk-based supervision in non-financial sectors such as money changers and money or value transfer services
  • Implementing proportionate sanctions for AML/CFT violations

Strengthening Financial Intelligence and International Cooperation

Indonesia has made good use of financial intelligence and international cooperation to mitigate these risks, with a good understanding of its threats and robust domestic inter-agency coordination. The Indonesian Financial Intelligence Unit has provided high-quality financial intelligence to law enforcement agencies for investigations into money laundering and terrorist financing cases.

Opportunities for Improvement:

  • Enhancing investigation and prosecution of different types of money laundering activities
  • Improving understanding of the risk of abusing non-profit sector for terrorism financing without discouraging legitimate charitable activities

The FATF report also highlights gaps in Indonesia’s legal framework for targeted financial sanctions on proliferation financing. Experts warn that Indonesia needs to address these shortcomings to prevent its financial system from being misused by malicious actors.

Next Steps:

  • Continuing to improve the AML/CFT framework
  • Taking proportionate measures to ensure compliance with international standards

By addressing these challenges and improving its AML/CFT framework, Indonesia can maintain its position as a leader in international efforts to combat money laundering and terrorist financing.