Financial Crime World

Indonesia’s Anti-Money Laundering Policies Receive Thumbs Up from Global Financial Watchdog

Indonesia has made significant strides in combating money laundering and terrorist financing, according to a recent evaluation by the Paris-based Financial Action Task Force (FATF). The country’s robust legal framework is being effectively leveraged through domestic and international cooperation to tackle these financial crimes.

Key Findings

  • Indonesia has a solid legal framework in place to combat money laundering and terrorist financing.
  • The country’s three main financial supervisory authorities have developed an anti-money laundering/combating the financing of terrorism (AML/CFT) framework, but more needs to be done to ensure adequate supervision of smaller sectors such as:
    • Money changers
    • Money or value transfer services
    • Non-financial businesses
  • Indonesia’s Financial Intelligence Unit is producing high-quality financial intelligence, which is being used effectively by law enforcement agencies.
  • However, the country still needs to improve its investigation and prosecution of different types of money laundering activities, particularly those involving assets located abroad or related to environmental crime.

Challenges

  • Indonesia still needs to address gaps in its asset recovery mechanisms, risk-based supervision, and proportionate sanctions.
  • The country’s understanding of the risk posed by the abuse of its non-profit sector for terrorism financing is limited, and more needs to be done to mitigate this risk without disrupting legitimate charitable activities.

Way Forward

  • Indonesia will continue to work to fulfill FATF’s membership requirements, including improving its AML/CFT framework and implementing effective sanctions.
  • The government is urged to focus on strengthening asset recovery mechanisms, risk-based supervision, and proportionate sanctions to prevent the misuse of financial systems for criminal activities.

Conclusion

With continued efforts, Indonesia can further strengthen its anti-money laundering policies and contribute to global efforts to combat financial crime. By addressing the identified challenges, Indonesia can improve its ability to detect, investigate, and prosecute money laundering and terrorist financing cases, and ultimately protect its financial system from abuse.