Financial Crime World

Indonesia’s Money Laundering Woes: What You Need to Know

Indonesia has made significant progress in combating money laundering and terrorist financing. The country’s efforts have earned it a spot as an observer of the Financial Action Task Force (FATF) and member of the Asia-Pacific Group on Money Laundering (APG).

A Troubled Past

However, Indonesia’s past is marred by a history of dealing with terrorism and terrorist financing. In 2017, government investigators uncovered a scheme involving the use of PayPal to finance terror activities.

Removal from FATF Blacklist

Indonesia was previously listed on the FATF blacklist but was removed in 2015 after improving its Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) measures. The country’s Financial Transaction Reports and Analysis Center (PPATK) chairman, Kiagus Ahmad Badaruddin, has expressed hopes that Indonesia will become a full member of the FATF by 2021.

Laws and Regulations

To address money laundering and terrorist financing, Indonesia has several laws in place, including:

  • Law No. 3 of 2011
  • Law No. 5 of 2018
  • Law No. 8 of 2010
  • Law No. 9 of 2013

The Bank of Indonesia has also issued regulations on implementing AML and CTF programs for commercial banks and non-bank payment system service providers.

Regulatory Bodies and Agencies

Several regulatory bodies and agencies play a crucial role in preventing money laundering within Indonesia’s financial services sector, including:

  • Financial Transaction Reports and Analysis Center (PPATK): serves as the country’s intelligence-gathering agency regarding money laundering and terrorist financing.
  • Financial Services Authority (OJK): plays a crucial role in preventing money laundering within Indonesia’s financial services sector.

Law Enforcement Bodies

Several law enforcement bodies have jurisdiction over investigating money laundering and corruption charges, including:

  • State Police of the Republic of Indonesia
  • Prosecutor’s Office
  • Corruption Eradication Commission (KPK)
  • National Narcotics Agency (BNN)
  • Directorate General of Taxes and Customs

The KPK is responsible for pursuing corruption cases.

Recent High-Profile Case

A recent high-profile case in Indonesia involved alleged bribery in the palm oil industry to cover up the improper use of protected forest land. As Indonesia continues to work towards becoming a full member of the FATF, it remains crucial that regulatory bodies and law enforcement agencies continue to prioritize combating money laundering and terrorist financing.

By understanding Indonesia’s efforts to combat money laundering and terrorist financing, we can better appreciate the country’s progress and challenges in this area.