Financial Crime World

Indonesia’s Financial Integrity Recognized Globally

The Association of Southeast Asian Nations (ASEAN) Plus Three (APT) countries have concluded their annual session in Kathmandu, Nepal, where they reviewed Indonesia’s compliance with international standards in preventing and combating money laundering and terrorism financing.

Assessment Highlights

  • Indonesia has made significant progress in implementing the 40 recommendations set by the Financial Action Task Force (FATF).
  • The country received a “C” rating for six out of the 40 recommendations, indicating compliance.
  • It received an “LC” rating for 29 others, indicating largely compliant implementation.

Outcomes and Recommendations

  • Indonesia’s effectiveness in implementing the recommendations was highlighted, with five immediate outcomes rated as substantial, five moderate, and one low.
  • The country received a “Non-Compliant” rating for only one recommendation, which relates to funding for the proliferation of weapons of mass destruction. It has been urged to improve its implementation in this area.

Roadmap towards FATF Membership

As part of its preparations, Bank Indonesia has developed three strategies to support the government’s efforts:

  • Strategy 1: Fulfilling FATF Recommendations
    • Focuses on implementing all FATF recommendations for payment systems and foreign exchange business activities.
    • Ensures the effective application of Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) principles to ensure the integrity of the financial system.
  • Strategy 2: Increasing Public Awareness and Institutional Cooperation
    • Focuses on increasing public awareness and institutional cooperation in preventing and combating money laundering, terrorism financing, and funding for the proliferation of weapons of mass destruction.
    • Educates the public on the use of licensed payment service providers and money changers.
  • Strategy 3: Developing a Risk-Based Approach to Supervision and Monitoring
    • Focuses on developing a risk-based approach to supervision and monitoring.
    • Applies a risk-based approach in the implementation of AML/CFT regulations and guidelines.
    • Strengthens cooperation with other financial institutions and law enforcement agencies.

Key Steps towards FATF Membership

  • Fulfilling all FATF recommendations.
  • Increasing public awareness and institutional cooperation.
  • Developing a risk-based approach to supervision and monitoring.
  • Continuing coordination and cooperation with other government agencies and financial institutions to ensure effective implementation of AML/CFT regulations and guidelines.

Indonesia’s progress in implementing international standards is seen as a major achievement for the country’s financial sector. With its sights set on becoming a full member of FATF, Indonesia is expected to continue making significant strides in promoting financial integrity and stability globally.