Financial Crime World

Indonesia Stepping Up Cooperation in Combating Financial Crime

Progress in Tackling Money Laundering and Terrorist Financing

Paris, 27 April 2023 - Indonesia has made significant strides in combating financial crime through enhanced domestic cooperation and international collaboration. However, experts emphasize that the country still needs to improve its asset recovery measures, risk-based supervision, and proportionate sanctions.

According to a recent assessment by the Financial Action Task Force (FATF), Indonesia’s legal framework is robust with a good understanding of the risks it faces from money laundering and terrorist financing. However, experts highlight that:

  • Asset recovery measures need improvement
  • Risk-based supervision requires more attention, particularly in the non-financial sector
  • Proportionate sanctions should be imposed in all sectors

Financial Supervisory Authorities Take Proactive Measures

Indonesia’s financial supervisory authorities have developed anti-money laundering and combating the financing of terrorism (AML/CFT) frameworks. Banks, larger financial institutions, and virtual asset service providers have a good understanding of the risks they face.

FATF Assessment Highlights Areas for Improvement

The FATF assessment noted that Indonesia:

  • Successfully detects, investigates, and prosecutes terrorist financing cases
  • Needs to improve its understanding of the risk of abuse of its non-profit sector for terrorism financing
  • Should take proportionate measures without discouraging or disrupting legitimate charitable activities

Continued Progress Expected

“The FATF assessment highlights areas where Indonesia needs to improve, but it also acknowledges the country’s progress in combating financial crime,” said an expert. “We expect Indonesia to continue working towards fulfilling the FATF’s membership requirements.”

The country has taken steps to address shortcomings in its legal framework for targeted financial sanctions on proliferation financing but some key gaps remain. The Financial Intelligence Unit has produced high-quality financial intelligence for law enforcement agencies to use in their investigations.

Way Forward

Indonesia needs to focus on improving risk-based supervision, impose effective and dissuasive sanctions, and ensure that accurate information on the ultimate owners of all companies is available to law enforcement.