Financial Crime World

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

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Jakarta, Indonesia - A recent evaluation by a global anti-money laundering and counter-terrorism financing (AML/CFT) body has found that Indonesia’s efforts to combat these crimes are effective in some areas, but require significant improvement in others.

Strengths and Weaknesses

According to the assessment, Indonesia has made notable progress in understanding its money laundering and terrorist financing risks, using financial intelligence for investigations, and cooperating with international partners. However, there are several areas where major improvements are needed, including supervision, implementation of preventive measures, and targeting of financial sanctions.

The evaluation praised Indonesia’s strong legal, regulatory, and institutional framework, which has resulted in robust technical compliance in some areas. However, the country still needs to implement targeted financial sanctions without delay and improve its risk-based approach for non-profit organizations (NPOs).

Risk Assessment and Intelligence Gathering

Indonesia has a good understanding of its ML/TF risks, reflected in national risk assessments and thematic and sectoral risk assessments. The country’s authorities have taken concrete steps to address ML/TF risks specific to Indonesia, including operational cooperation and coordination with international partners.

  • National risk assessments and thematic and sectoral risk assessments are regularly conducted.
  • Financial intelligence is regularly used by competent authorities to support ML/TF investigations.
  • The Indonesian Financial Intelligence Unit (PPATK) produces a wide range of financial intelligence products.

Limitations

However, there are limitations in the number of suspicious transaction reports received from designated non-financial businesses and professions (DNFBPs) and those related to environmental crimes. Additionally, the evaluation found that Indonesia has a relatively small number of ML investigations, and there is a need for more proactive investigation and prosecution of these crimes.

Recommendations

To effectively address money laundering and terrorist financing threats, Indonesia needs to:

  • Enhance targeted outreach and oversight activities for NPOs identified as most vulnerable to terrorist financing abuse.
  • Improve its implementation of financial sanctions.
  • Increase the number of ML investigations and prosecutions.
  • Ensure transparency and beneficial ownership information of legal persons.

Overall, while Indonesia has made progress in combating money laundering and terrorist financing, there are still significant areas that require improvement to effectively address these threats.