Financial Crime World

Title: Indonesia Cracking Down on Financial Crimes: AML Compliance in Spotlight

Subheading: Indonesian Financial Institutions Adopt Risk-Based Approach Against Money Laundering

Indonesia, with its growing significance in the global economy, is intensifying its actions against financial crimes, including money laundering. In accordance with international initiatives, Indonesian regulators advocate for a risk-based approach to AML (Anti-Money Laundering) compliance.

Key Components of AML Programs in Indonesia

1. Customer Due Diligence

Implementing a robust customer due diligence process is essential for preventing financial crimes:

  • Identifying customers’ identity: This step ensures that financial institutions have accurate information about their customers.
  • Assessing risks: Assessing the risks involved in transactions based on clients’ backgrounds, occupation, and country of residence.

2. Screen Scanning

Financial institutions in Indonesia integrate:

  • Advanced technology: Such as automated screen scanning systems for real-time transaction monitoring.
  • Suspicious activity detection: To swiftly identify and investigate potential money laundering or terrorist financing activities.

3. Adverse Media

Staying informed about customers or entities’ adverse media can help prevent financial institutions from dealing with potentially risky individuals or organizations:

  • Tracking news: Regularly monitoring the latest news to stay updated on possible developments that may impact customers’ or entities’ risk status.

4. PEPs Lists and AML Program

In accordance with FATF recommendations, Indonesian financial institutions must:

  • Keep up-to-date with PEPs (Politically Exposed Persons) lists: These lists include individuals who might be more prone to engaging in money laundering and terrorist financing activities due to their positions.
  • Adhere to their internal AML programs: Close monitoring and scrutiny of transactions involving PEPs can help financial institutions maintain an AML stance and prevent financial criminal activities.

Indonesian Regulatory Bodies Dedicated to AML Compliance

Indonesian regulatory bodies, such as the Financial Services Authority (OJK), work closely with financial institutions to ensure compliance with AML regulations. The Indonesian government’s commitment to strengthening anti-financial crime measures significantly contributes to maintaining a transparent financial sector and economic stability in Indonesia.

Sources

  1. Financial Services Authority (OJK)
  2. Money Laundering and Terrorism Financing (Prevention) Regulation No. 19/POJK.06/2016
  3. Indonesia’s Implementation of the FATF Recommendations, (February 2021 report)