Financial Crime World

Indonesia’s Financial Regulator Issues New Regulation on AML-CFT and CPF Program

The Indonesian Financial Services Authority (OJK) has issued a new regulation aimed at strengthening the integrity of the country’s financial services sector by implementing anti-money laundering (AML), counter-terrorist financing (CFT), and counter-proliferation financing (CPF) programs.

Background

The OJK Regulation No. 8 of 2023 replaces POJK No. 12/POJK.01/2017, as amended by POJK No. 23/POJK.01/2019, and is designed to mitigate the emerging risks of money laundering, terrorist financing, and proliferation financing.

Alignment with International Principles

The new regulation is aligned with international principles issued by the Financial Action Task Force on Money Laundering (FATF) and Indonesian laws and regulations. It also demonstrates OJK’s commitment to supporting Indonesia’s aspiration to become a full member of FATF.

Key Provisions

The key provisions of the regulation include:

  • Extension of AML-CFT and CPF Programs: The requirement for financial institutions (FIs) to implement AML-CFT and CPF programs has been extended to trusts, securities crowdfunding, fintech or digital financial innovation firms, and other FIs that are required by law.
  • Regulatory Provisions on Proliferation Financing: Mandatory assessment, policies and procedures, risk mitigation, suspicious transaction reports, freezing of assets without delay, and sanctions for violations are among the regulatory provisions related to proliferation financing.
  • AML-CFT and CPF Program Registration: FIs must ensure that professionals providing services have implemented the AML-CFT and CPF program and are registered in GoAML.
  • Individual Risk Assessments (IRA) and Customer Due Diligence (CDD): FIs must prepare and submit individual risk assessments (IRA) and conduct customer due diligence (CDD) on beneficial owners of customers.
  • Engagement between FIs and Third Parties: Revised requirements for engagement between FIs and third parties, including face-to-face and non-face-to-face verifications through electronic means.
  • Compliance Management Functions: Revised provisions on compliance management functions, independent internal audits, and pre-employee screening procedures.
  • Increased Administrative Sanctions: Increased administrative sanctions for AML-CFT and CPF violations.

Additional Provisions

The regulation also aligns with the Law on Job Creation, which introduces a new entity called Single Partner Limited Company (Perusahaan Perseorangan). Additionally, it provides arrangements regarding the postponement or suspension of transactions suspected to be related to money laundering, terrorist financing, and proliferation financing.

Transition Period

Financial institutions have been given a maximum transition period of six months from the issuance of the regulation to make necessary adjustments.