Indonesia’s War on Financial Crimes: A Strong Legal Framework Amidst Persisting Challenges

Paris, April 27, 2023

Recognition for Indonesia’s Robust Legal Framework

Indonesia’s unwavering commitment to combating money laundering and terrorist financing has earned the country recognition for its robust legal framework.

Money Laundering Risks and Challenges in Indonesia

• Primarily stems from domestic crimes: corruption, narcotics, tax evasion, and forestry-related crimes
• Significant terrorism financing risks: presence of terrorist organizations and their supporters

Commendable Understanding of Risks and Effective Strategies

• Crafted risk-based policies and strategies to mitigate risks
• Domestic inter-agency coordination and international cooperation

Shortcomings and Areas for Improvement

Improving Risk-Based Supervision

• Money changers, money or value transfer services, and non-financial sectors
• Proportionate sanctions needed in all sectors
• Ensure transparency in identifying ultimate owners of companies

Strengthening the Role of Financial Intelligence Unit (FIU)

• Deprive criminals of the proceeds of their crimes
• Address challenges related to forestry or environmental crimes

Tackling Terrorism Financing

• Detecting, investigating, and prosecuting cases
• Emphasize returning foreign terrorist fighters and de-radicalization
• Enhance understanding of risks in non-profit sector

Meeting FATF’s Membership Requirements

Following the FATF’s assessment of Indonesia’s application for membership, Indonesia continues its work to meet the FATF’s membership requirements.

Key Takeaways

• Strong legal framework against financial crimes
• Persisting challenges: asset recovery, risk-based supervision, and proportionate sanctions
• Addressing terrorism financing risks and enhancing understanding of risks in the non-profit sector
• Meeting FATF’s membership requirements through continuous improvements