Financial Crime World

Indonesia’s Financial Regulator Issues New Regulation to Strengthen AML-CFT and CPF Compliance in Financial Services Sector

The Indonesian Financial Services Authority (OJK) has issued a new regulation aimed at strengthening the implementation of Anti-Money Laundering (AML), Counter-Terrorist Financing (CFT), and Counter-Proliferation Financing of Weapons of Mass Destruction (CPF) programs in the financial services sector. The new regulation, OJK Regulation No. 8/2023, replaces POJK No. 12/POJK.01/2017 and aims to mitigate emerging risks of money laundering, terrorist financing, and weapons mass destruction proliferation financing.

Key Features of the New Regulation

The new regulation is aligned with international principles, Indonesian laws, and technological advancements while ensuring security and confidentiality. The key features of the regulation include:

  • Extension of AML-CFT and CPF program implementation requirements to trust institutions, securities crowdfunding companies, fintech firms, and other financial institutions under OJK’s jurisdiction
  • Mandatory assessments, policies, and procedures for proliferation financing
  • Measures for freezing assets and imposing sanctions
  • Requirement for financial institutions (FIs) to ensure that their supporting professionals have implemented AML-CFT and CPF programs and are registered in GoAML, an information system for reporting managed by PPATK
  • Preparation and submission of individual risk assessments and conduct customer due diligence on beneficial owners

Revised Requirements and Procedures

The regulation also introduces revised requirements and procedures for engagement between FIs and third-party providers, including:

  • Electronic know-your-customer (E-KYC) verification processes
  • Compliance management functions
  • Internal audits
  • Pre-employee screening
  • Administrative sanctions

Transition Period

The OJK has provided a six-month transition period for financial institutions to implement the new regulations, which are expected to take effect from the date of issuance.

Commitment to International Standards and Indonesia’s Aspiration to Join FATF

According to Chairman Mahendra Siregar, the new regulation demonstrates OJK’s commitment to supporting Indonesia’s aspiration to become a full member of the Financial Action Task Force on Money Laundering (FATF). The regulation is also aligned with international principles and Indonesian laws, ensuring security and confidentiality.