Financial Crime World

Indonesia’s Battle Against Financial Crimes: An Overview of the Anti-Money Laundering Regime

Indonesia, the world’s fourth most populous country, is making strides in combating financial crimes, including money laundering and corruption. In this article, we provide an overview of the legal and institutional framework implementing the United Nations Convention against Corruption and key aspects of Indonesia’s anti-money laundering regulatory regime.

Indonesia’s commitment to eradicating financial crimes began with the signing of the United Nations Convention against Corruption on December 18, 2003, and its ratification on September 19, 2006. Significant legislation has been enacted to implement these commitments, including:

  1. Law No. 31 of 1999 on Eradication of the Criminal Act of Corruption
  2. Prevention and Eradication of Money Laundering Criminal Act No. 8 of 2010 (MLCA)
  3. Law No. 5 of 2014 on State Civil Apparatus
  4. Law No. 14 of 2008 on Public Information Disclosure
  5. Law No. 28 of 1999 on State Administration that is Clean and Free from Corruption, Collusion and Nepotism
  6. Regulation No. 54 of 2010 on Public Procurement of Goods and Services
  7. Law No. 1 of 2006 concerning Mutual Legal Assistance in Criminal Matters (MLA Law)

Institutions responsible for countering corruption and money laundering include:

  • Corruption Eradication Commission (KPK)
  • Attorney General’s Office (AGO)
  • Ministry of Law and Human Rights
  • Ministry of Foreign Affairs
  • Ministry of Finance
  • Indonesian National Police
  • Supreme Audit Board (BPK)
  • Finance and Development Supervisory Agency (BPKP)
  • National Ombudsman Commission
  • Financial Intelligence Unit (PPATK)
  • Financial Service Authority (OJK)
  • Ministry of National Development Planning (Bappenas)
  • Ministry of Administration and Bureaucratic Reform (AR&BR)
  • Civil Service Commission (KASN)
  • Public and Procurement Agency (LKPP)
  • Judicial Commission (KY)

II. Understanding Anti-Money Laundering Regulatory Regimes

Law Number 8 of 2010 concerning Prevention and Eradication of Money Laundering (Money Laundering Law) outlines the tasks, authority, and mechanisms of Indonesian institutions in the anti-money laundering regime. The legislation covers various aspects of money laundering, including:

  1. Criminal acts constituting money laundering
  2. Compliance monitoring and reporting procedures
  3. Carrying cash and payment instruments
  4. The structure and authority of the Financial Intelligence Unit (PPATK)
  5. Procedures for the temporary suspension of financial transactions
  6. Investigations, prosecutions, and court hearings
  7. Protection for whistle-blowers and witnesses
  8. Cooperation in the prevention and eradication of money laundering

III. Typical Money-Laundering Schemes

Money laundering schemes typically consist of three stages:

  1. Placement - criminal proceeds are placed into the financial system
  2. Layering (Transfer) - criminals attempt to separate the criminal proceeds from the original crime through various financial transactions
  3. Integration (Using Property) - criminals use the funds obtained in the previous steps to finance legal business activities or reinvest in criminal enterprises

Indonesian authorities have been working diligently to prevent and prosecute these complex schemes. By strengthening regulations and promoting international cooperation, Indonesia continues to demonstrate its commitment to combating financial crimes and promoting transparency and integrity.

IV. Investigators’ Role in Combating Money-Laundering Crimes

Law enforcement agencies rely on the financial intelligence provided by Indonesia’s Financial Intelligence Unit (PPATK) to trace and prevent money laundering activities. Investigators conduct thorough investigations, tracing suspects’ family histories, freezing bank accounts, requesting assistance from PPATK, and performing various compulsory measures against suspects or related persons.

However, combating money laundering is a complex challenge, necessitating continuous professional development, understanding of financial products and services, and the ability to work in a coordinated and independent manner. Inadequate resources, weak regulations, and insufficient training continue to pose significant challenges for investigators in effectively addressing this issue.

V. Indonesia’s Dedication to Combating Money Laundering

Indonesia’s dedication to strengthening its anti-money laundering framework is evident in its progress towards meeting international standards and ratifying essential treaties, such as the United Nations Convention against Corruption and various other international instruments. By addressing the challenges presented in this realm and promoting transparency and accountability, Indonesia continues to take crucial steps towards an increasingly secure financial future.