Navigating Indonesia’s Complex Compliance Landscape: A Corporate Guide to Financial Crime and Ethics
Amidst heightened global scrutiny on business conduct, understanding the financial crime regulations in Indonesia is essential for corporations. This article offers a clear-cut overview of major financial crime offenses and the Indonesian laws regulating these activities, with a particular focus on implications for businesses and their leadership.
Corruption
Indonesia’s primary legislation against corruption includes:
- Law Number 31 of 1999 on Eradication of Corruption and its amendments, such as Law Number 20 of 2001.
Should a corporation or its management commit a corrupt act, as per Article 20 Paragraph (1), both the corporation and the individuals involved may face legal consequences.
Money Laundering
Under Law Number 8 of 2010 on the Prevention and Eradication of Money Laundering Crime:
- Corporations and their controlling personnel can be held accountable if money laundering offenses, outlined in Articles 3, 4, and 5, are committed through their activities.
Tax Evasion
Law Number 28 of 2007 on the Third Amendment to Law Number 6 of 1983 on General Provisions and Procedures of Tax, as amended, includes provisions on tax evasion:
- Common methods of tax evasion, such as underreported income or inflated expenses with the intention of minimizing tax liability, are serious offenses.
Fraud
Indonesia’s Law Number 5 of 1999 on Prohibition of Monopolistic Practices and Unfair Business Competition, as amended by the Job Creation Law:
- Covers fraudulent business practices like monopolies, price fixing, cartels, and dominant positions.
- Articles 48 and following outline criminal sanctions applicable to business entities and individuals.
By staying informed of the specific regulations surrounding financial crime in Indonesia, corporations and their leadership can maintain robust compliance programs and governance structures, ensuring ethical business practices and reducing the risk of legal complications.