Financial Crime World

Indonesia’s Stride Against Terrorist Financing and Money Laundering: Strengthening Legal Framework and International Cooperation

Paris, April 27, 2023

Indonesian Commitment to Tackling Money Laundering and Terrorist Financing

Indonesia’s unwavering dedication to fighting money laundering and terrorist financing has earned international praise for its robust legal framework and effective use of financial intelligence and international cooperation. Despite persistent challenges, the country tackles money laundering risks driven by domestic crimes and heightened terrorism financing risks.

Money Laundering Risks and Mitigation Strategies

Indonesia faces money laundering risks from various sources, primarily:

  • Corruption
  • Narcotics
  • Tax fraud
  • Forestry crimes

Government progress includes:

  • Developing risk-based policies and strategies
  • Enhancing inter-agency coordination
  • Actively supervising financial institutions

Areas requiring more attention:

  • Money changers
  • Money transfer services
  • Non-financial sector entities

Tackling Terrorism Financing

Indonesia grapples with terrorism financing risks due to the presence of terrorist groups and their supporters. Notable achievements:

  • Domestic inter-agency coordination
  • International cooperation

Challenges remain:

  • Improving the understanding and implementation of proportionate measures
  • Preventing abuse of the non-profit sector for terrorism financing

Enhancing Risk-Based Supervision and Sanctions

Indonesia’s financial regulatory bodies have made progress, but there is room for improvement:

  • Enhance risk-based supervision
  • Impose effective and dissuasive sanctions
  • Expand regulatory oversight beyond financial institutions

The Role of Indonesian Financial Intelligence Unit (U Pintar)

U Pintar provides financial intelligence to law enforcement for money laundering, terrorist financing investigations, and other offenses. Areas requiring improvement:

  • Investigation and prosecution processes
  • Permanent confiscation of criminals’ assets, especially those derived from forestry or environmental crimes or located abroad

Addressing Proliferation Financing

Indonesia has taken steps to address gaps in its legal framework for targeted financial sanctions on proliferation financing. However, key areas require further attention as part of its bid for FATF membership.