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Indonesia’s Fight Against Money Laundering and Terrorist Financing: Room for Improvement
Jakarta, Indonesia - A recent report has identified several areas where Indonesia can improve its efforts to combat money laundering and terrorist financing. While significant progress has been made by financial institutions, Designated Non-Financial Businesses and Professions (DNFBPs), and competent authorities in implementing anti-money laundering and counter-terrorist financing measures, there are still concerns that need to be addressed.
Financial Institutions’ Efforts
Financial institutions in Indonesia have implemented various measures to prevent money laundering and terrorist financing. These include customer due diligence, ongoing monitoring of transactions, and reporting suspicious activities. However, the authorities should intensify their efforts to ensure that all financial institutions are complying with these measures.
DNFBPs’ Role in AML/CFT
Designated Non-Financial Businesses and Professions (DNFBPs), such as lawyers, notaries, and real estate agents, play a crucial role in preventing money laundering and terrorist financing. The report highlights that DNFBPs have a high risk of being used for illicit activities. Therefore, the authorities should increase targeted outreach to these high-risk entities to ensure appropriate supervision and risk mitigation.
Beneficial Ownership and Transparency
The report recommends that Indonesia should improve its beneficial ownership regime by:
- Increasing the number of BO registrations
- Ensuring that all legal persons are populated in the central registry
- Providing clear guidance on how to identify and report changes in beneficial ownership
International Cooperation
Indonesia has made significant progress in international cooperation, including bilateral and multilateral agreements for providing and seeking MLA (Mutual Legal Assistance) and extradition. However, the report notes that there are still delays in exchanging information in some instances. Therefore, the authorities should continue to improve their coordination with foreign counterparts.
Priority Actions
To address these concerns, the authorities in Indonesia have been tasked with implementing the following priority actions:
- Increase targeted outreach to high-risk NPOs (Non-Profit Organizations) and DNFBPs.
- Develop a high-level operational policy across competent authorities on initiating parallel ML investigations when investigating relevant predicate offences.
- Refine the process to identify high-risk NPOs.
- Improve coordination with foreign counterparts in international cooperation.
By implementing these priority actions, Indonesia can further strengthen its efforts to combat money laundering and terrorist financing, and ensure a safer financial system for all citizens.