Indonesia’s Anti-Money Laundering Landscape: Regulators, Laws, and Recent Developments

Indonesia, as a member of the Financial Action Task Force (FATF) and the Asia/Pacific Group on Money Laundering (APG), is committed to strengthening its anti-money laundering (AML) and counter-terrorist financing (CTF) framework. This article provides an overview of Indonesia’s regulatory landscape, key legislation, and recent developments.

Indonesia’s Efforts to Combat Money Laundering and Terrorist Financing

Indonesia’s involvement in financing illicit activities came to light in 2017, when a terrorist financing scheme involving PayPal was exposed. This incident led to Indonesia being placed on the FATF’s blacklist. However, the country was able to regain its standing by enhancing its approach to AML and CTF and was removed from the blacklist in 2015. Indonesia aims to become a full member of the FATF by 2021, a testament to its commitment to the global battle against financial crime.

Legislation and Regulations

To protect its financial system against money laundering and terrorist financing, the Indonesian government has enacted several pieces of legislation:

Law No. 3 of 2011 on the Reporting and Analysis of Financial and Economic Transactions
Law No. 5 of 2018 on the Procedure for Taking Legal Actions in the Criminal Justice System
Law No. 8 of 2010 on the Eradication of Money Laundering and Financing of Terrorism
Law No. 9 of 2013 on the Corruption Eradication Commission

Additionally, the Bank of Indonesia has issued regulations:

Regulation No. 14/27/PBI/2012 for commercial banks
Regulation No 19/10/PBI/2017 for non-bank payment system service providers and non-bank currency exchange services

Extensive regulations are in place concerning the application of “Know Your Customer” (KYC) standards.

Regulators

The government’s Financial Transaction Reports and Analysis Center (PPATK) serves as Indonesia’s intelligence-gathering agency for money laundering and terrorist financing cases. The Bank of Indonesia and the Financial Services Authority (OJK) also play crucial roles in preventing money laundering within the country’s financial services sector.

Recent Developments and Ongoing Investigations

In cases of money laundering and other corruption investigations, various agencies hold jurisdiction, including:

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

Recent corruption scandals in the country have centered around alleged bribery in the palm oil industry, with a view to conceal unlawful use of protected forest land.

Subheadings:

Indonesia’s Commitment to Combating Money Laundering and Terrorist Financing
Key Legislation and Regulations
- Law No. 3 of 2011
- Law No. 5 of 2018
- Law No. 8 of 2010
- Law No. 9 of 2013
- Bank of Indonesia Regulations
Regulatory Bodies in Indonesia
- PPATK
- Bank of Indonesia
- Financial Services Authority (OJK)
Recent Corruption Scandals and Ongoing Investigations

Bullet points:

Indonesia’s past involvement in money laundering and terrorist financing became evident in 2017
The country was placed on the FATF’s blacklist but was able to regain its standing in 2015
Indonesia aims to become a full member of the FATF by 2021
Key legislation includes Law No. 3 of 2011, Law No. 5 of 2018, Law No. 8 of 2010, Law No. 9 of 2013, and several Bank of Indonesia regulations
Regulatory bodies include the PPATK, Bank of Indonesia, and Financial Services Authority (OJK)
Jurisdiction for money laundering and corruption investigations includes the State Police, Prosecutor’s Office, Corruption Eradication Commission (KPK), National Narcotics Agency (BNN), Directorate General of Taxes, and Directorate General of Customs and Excise of the Ministry
Recent corruption scandal centered around alleged bribery in the palm oil industry to conceal unlawful use of protected forest land