Indonesia's measures to combat money laundering and terrorist financing

Publication details

Language

English

Country

Indonesia

Filename
Mutual-Evaluation-Report-Indonesia-2023.pdf
Size
3 MB
Format
application/pdf
Download

Paris, 27 April 2023 – Indonesia has a strong legal framework to tackle money laundering and terrorist financing and is making good use of financial intelligence and domestic and international cooperation. Indonesia needs to focus more on improving asset recovery, risk-based supervision and proportionate and dissuasive sanctions.

The money laundering risk for Indonesia comes primarily from domestic crimes such as corruption, narcotics, tax crimes as well as forestry crimes. The country faces high terrorism financing risks due to the presence of terrorist organisations and their supporters in the country. 

The FATF mutual evaluation of Indonesia highlights that the country has a good understanding of the risks it faces and that it has developed risk-based policies and strategies to mitigate them. These include robust domestic inter-agency coordination and cooperation. Indonesia is also producing good results in international cooperation, in particular informal cooperation on time sensitive terrorism and terrorism financing cases.

Indonesia’s three main financial supervisory authorities proactively developed their AML/CFT framework. Banks, larger financial institutions and virtual asset service providers have a good understanding of the risks they face, but this understanding is more varied in other sectors. Indonesia needs to improve risk-based supervision, in particular of money changers, money or value transfer services and non-financial sector and impose effective and dissuasive sanctions in all sectors. Indonesia should also ensure that accurate information on the ultimate owners of all companies is available to law enforcement.

The Indonesian Financial Intelligence Unit provides high quality, timely and targeted financial intelligence to law enforcement for use in their investigations into money laundering, terrorist financing and other offences.  But Indonesia should improve the investigation and prosecution of different types of money laundering activities and ensure that it permanently deprives criminals of the proceeds of their crimes, particularly assets located abroad or assets from forestry or environmental crime.

Indonesia successfully detects, investigates and prosecutes terrorist financing in line with its risk profile. The country’s strategy includes a focus on returning foreign terrorist fighters and de-radicalisation. However, Indonesia should improve its understanding of the risk of abuse of its non-profit sector for terrorism financing and take proportionate measures without discouraging or disrupting legitimate charitable activities.

Indonesia has taken steps to address shortcomings in their legal framework for targeted financial sanctions on proliferation financing, but some key gaps remain.

The FATF assessed Indonesia in the context of its request for FATF Membership. The country will continue its work to fulfil the FATF’s membership requirements.

Executive Summary MER Indonesia-2023

Filename
Executive-Summary-Mutual-Evaluation-Report-Indonesia-2023.pdf
Size
290 KB
Format
application/pdf
Download

Ratings

Effectiveness

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Indonesia Mutual Evaluation 2023

IO1
SE
IO2
SE
IO3
ME
IO4
ME
IO5
ME
IO6
SE
IO7
ME
IO8
ME
IO9
SE
IO10
ME
IO11
ME

HE = high level of effectiveness   |   SE = substantial level of effectiveness    |   ME = moderate level of effectiveness   |   LE = low level of effectiveness

Technical Compliance

Ratings which reflect the extent to which a country has implemented the technical requirements of the FATF Recommendations.

Indonesia Mutual Evaluation 2023

R.1 - Assessing risk & applying risk-based approach
LC
R.2 - National cooperation and coordination
LC
R.3 - Money laundering offence
C
R.4 - Confiscation and provisional measures
LC
R.5 - Terrorist financing offence
LC
R.6 - Targeted financial sanctions related to terrorism & terrorist financing
PC
R.7 - Targeted financial sanctions related to proliferation
PC
R.8 - Non-profit organisations
PC
R.9 - Financial institution secrecy laws
LC
R.10 - Customer due diligence
LC
R.11 - Record keeping
LC
R.12 - Politically exposed persons
LC
R.13 - Correspondent banking
LC
R.14 - Money or value transfer services
C
R.15 - New technologies
LC
R.16 - Wire transfers
LC
R.17 - Reliance on third parties
LC
R.18 - Internal controls and foreign branches and subsidiaries
C
R.19 - Higher-risk countries
LC
R.20 - Reporting of suspicious transactions
C
R.21 - Tipping-off and confidentiality
LC
R.22 - DNFBPs: Customer due diligence
LC
R.23 - DNFBPs: Other measures
LC
R.24 - Transparency and beneficial ownership of legal persons
LC
R.25 - Transparency and beneficial ownership of legal arrangements
PC
R.26 - Regulation and supervision of financial institutions
LC
R.27 - Powers of supervisors
LC
R.28 - Regulation and supervision of DNFBPs
PC
R.29 - Financial intelligence units
C
R.30 - Responsibilities of law enforcement and investigative authorities
C
R.31 - Powers of law enforcement and investigative authorities
LC
R.32 - Cash couriers
LC
R.33 - Statistics
LC
R.34 - Guidance and feedback
LC
R.35- Sanctions
LC
R.36 - International instruments
LC
R.37 - Mutual legal assistance
LC
R.38 - Mutual legal assistance: freezing and confiscation
LC
R.39 - Extradition
LC
R.40 - Other forms of international cooperation
LC

C = compliant   |   LC = largely compliant     |   PC = partially compliant   |   NC = non-compliant

Related materials

APG

The FATF Recommendations

The FATF Recommendations are the basis on which all countries should meet the shared objective of tackling money laundering, terrorist financing and the financing of proliferation. The FATF calls upon all countries to effectively implement these measures in their national systems.
Read more

Mutual Evaluations

The FATF conducts peer reviews of each member on an ongoing basis to assess levels of implementation of the FATF Recommendations, providing an in-depth description and analysis of each country’s system for preventing criminal abuse of the financial system
Read more Consolidated assessment ratings
ESAAMLG Logo

FATF Methodology for assessing compliance with the FATF Recommendations and the effectiveness of AML/CFT systems

The FATF Methodology for assessing compliance with the FATF Recommendations and the effectiveness of AML/CFT systems sets out the evaluation process.
Read more