Financial Crime World

Indonesia’s Anti-Money Laundering Landscape: Regulations, Agencies, and Recent Developments

Indonesia’s progress in the fight against money laundering (AML) and terrorist financing (CTF) has been recognized by the Financial Action Task Force (FATF) and the Asia/Pacific Group on Money Laundering (APG). This comes after the country faced scrutiny and was listed by the FATF in 2015 due to past dealings with terrorism financing and associated money laundering tactics.

Indonesian Legislation against Money Laundering and Terrorist Financing

The Indonesian government has enacted several laws to combat money laundering and terrorist financing:

  • Law No. 3 of 2011: Legalizing the establishment and regulations of Financial Transaction Reporting Institutions (PTRIs) and Suspicious Transactions Reporting (STR).
  • Law No. 5 of 2018: Protection and Eradication of Money Laundering Criminal Acts.
  • Law No. 8 of 2010: Stipulating the General Provisions of the Criminal Code (KUHAP) as applicable to anti-money laundering.
  • Law No. 9 of 2013: AML/CFT and the Confiscation of the Proceeds of Crime.

Additional regulations have been implemented by the Indonesian central bank, Bank of Indonesia:

  • Regulation No. 14/27/PBI/2012: Implementation of Anti-Money Laundering and Countering the Financing of Terrorism Programs for Commercial Banks.
  • Regulation No. 19/10/PBI/2017: Adoption of an “Anti-Money Laundering and Prevention of Terrorism Financing for Non-Bank Payment System Service Provider and Non-Bank Currency Exchange Service” Procedure.

Know Your Customer (KYC) standards are also extensively applied within the Indonesian financial sector.

Key Indonesian Agencies in AML/CFT

Two primary agencies play significant roles in the Indonesian AML landscape:

  1. The Financial Transaction Reports and Analysis Center (PPATK): This is the country’s intelligence-gathering agency concerning money laundering and terrorist financing.
  2. The Financial Services Authority (OJK): The organization plays a role in preventing money laundering within the financial services sector.

Investigation and Prosecution Agencies in Indonesia

Several agencies have jurisdiction in investigating money laundering and other corruption charges within Indonesia, including:

  • State Police of the Republic of Indonesia.
  • Prosecutor’s Office.
  • Corruption Eradication Commission (KPK).
  • National Narcotics Agency (BNN).
  • Directorate General of Taxes.
  • Directorate General of Customs and Excise of the Ministry of Finance.

In recent cases, the Indonesian authorities, specifically the KPK and public prosecutors, have vigorously pursued the investigation and prosecution of money laundering and corruption charges. One notable case involves alleged bribery in the country’s palm oil industry to conceal the misuse of forest lands.

Recent Developments

Despite the progress made in Indonesia’s anti-money laundering efforts, challenges persist. These include weaknesses in the detection and reporting of suspicious transactions, as well as the need for greater international cooperation in investigating and prosecuting money laundering and terrorist financing cases.

Continued efforts from the Indonesian government and cooperation from international organizations will be crucial in ensuring the effectiveness of Indonesia’s AML/CFT framework.