Indonesia’s Financial System Earns High Marks from APG
Kathmandu, Nepal - The Asia-Pacific Group on Money Laundering (APG) has given Indonesia a thumbs up for its efforts in combating money laundering and terrorist financing. In the latest assessment, Indonesia received high ratings for its compliance with international standards and effectiveness in implementing anti-money laundering/counter-terrorist financing (AML/CFT) measures.
APG’s Mutual Evaluation Report
The APG’s Mutual Evaluation Report (MER) found that Indonesia has made significant progress in implementing the 40 FATF Recommendations, a set of international standards aimed at preventing and combating money laundering, terrorist financing, and the funding of weapons of mass destruction. The report praised Indonesia for its strong legal framework, effective supervision, and robust reporting mechanisms.
Compliance Ratings
Indonesia received a “C” rating (compliant) or the highest score for 6 recommendations related to legal framework compliance, an “LC” (largely compliant) rating for 29 recommendations, and a “PC” (partially compliant) rating for 4 recommendations. The only recommendation with a “NC” (non-compliant) rating was related to funding for weapons of mass destruction.
Effectiveness Ratings
In terms of effectiveness, Indonesia received a Substantial rating for 5 Immediate Outcomes (IO), a Moderate rating for 5 IO, and a Low rating for 1 IO related to funding for weapons of mass destruction. The report noted that Indonesia’s implementation of AML/CFT measures is better than that of some other APG countries such as Australia, Malaysia, and Singapore.
Roadmap towards FATF Membership
The APG assessment is seen as a significant step forward in Indonesia’s efforts to join the Financial Action Task Force (FATF), an inter-governmental organization aimed at combating money laundering, terrorist financing, and weapons of mass destruction. FATF membership would provide Indonesia with international recognition for its financial system integrity and open up new opportunities for investment and economic cooperation.
Bank Indonesia’s Strategies
In support of the government’s efforts to become a full member of FATF, Bank Indonesia has prepared three strategies:
- Fulfillment of all FATF recommendations for the payment system sector and foreign exchange business activities in preventing and eradicating money laundering, terrorism financing, and the proliferation of weapons of mass destruction.
- Effective application of AML/CFT principles to support the integrity of the financial system, increase Indonesia’s credibility and reputation, and comply with applicable international standards.
- Increasing public awareness and institutional cooperation in preventing and eradicating money laundering, terrorism financing, and funding for weapons of mass destruction.
Bank Indonesia’s Initiatives
Bank Indonesia has issued provisions and guidelines related to AML/CFT principles, risk assessment, and payment system supervision. The bank has also conducted sectoral risk assessments and risk-based approach guidelines for non-bank payment system service providers and non-bank money changers.
Conclusion
The APG report is a significant achievement for Indonesia’s financial sector, demonstrating the country’s commitment to combating money laundering and terrorist financing. With this assessment, Indonesia is now closer to achieving its goal of becoming a full member of FATF.