Anti Money Laundering Indonesia - AML Regulations

Anti Money Laundering Indonesia: What You Need To Know

One of Southeast Asia’s most important economies, Indonesia is increasingly focused on anti money laundering regulation. Indonesia has traditionally struggled with money laundering threats thanks to a lack of regulation and institutional corruption. However, since the turn of the century, the government has stepped up its efforts to fight financial crime and promote anti money laundering in Indonesia through legislation. In 2002, those efforts were marked by the introduction of the Pusat Pelaporan dan Analysis Transaksi Keuangan (PPATK), Indonesia’s financial intelligence unit, and the passage of legislation specifically targeting money laundering and associated crimes like the financing of terrorism.

In 2012, the Financial Action Task Force (FATF) put Indonesia on a blacklist of countries at a high risk of money laundering. After working to address anti money laundering, Indonesia was removed from that list in 2015 and, in 2018, was granted ‘observer’ FATF status with a view to achieving full membership status in the future.

With a continuing focus on AML law, Indonesia is taking further steps to modernize its legislative landscape. With that in mind, we’ve put together a need-to-know guide for AML in Indonesia.

Anti Money Laundering Indonesia Regulators and Legislators

Bank Indonesia, Indonesia’s central bank, and the Financial Services Authority of Indonesia, known as Otoritas Jasa Keuangan (OJK), are responsible for issuing AML regulations in Indonesia and have regulatory and supervisory authority over all banks and financial institutions. The OJK was established in 2011 as an independent, autonomous body and has a mandate to protect the financial stability of Indonesia – that role includes issuing banking licenses and monitoring AML compliance.

The principle anti money laundering Indonesia legislation is OJK Regulation No.12/POJK.01/2017 concerning the Implementation of the Anti Money Laundering Program and Terrorism Funding Prevention in the Financial Service Sector. The law requires institutions to make a series of AML and CFT provisions which meet standards set by the OJK and the FATF.

AML Compliance in Indonesia

In strengthening its anti money laundering Indonesia regulations and working towards the standards set out in the FATF’s 40 Recommendations, banks and financial institutions take a risk-based approach to the money laundering threats they face. The risk-based approach is central to FATF AML policy and involves assessing the risk posed by individual customers and clients. In practical terms AML compliance programs in Indonesia must;

• Implement appropriate customer due diligence (CDD) measures in order to identify customers and clients. Enhanced due diligence measures are also necessary for high-risk customers.
• Screen customers against international sanctions list, adverse media, and politically exposed persons (PEP) lists.
• Appoint a dedicated AML compliance officer to oversee the internal AML program.

FATF Compliance

In 2017, Indonesia introduced stronger AML regulations in order to strengthen its push for FATF membership. Under the new regulations:

• All non-bank financial institutions in Indonesia are now made public to improve administrative transparency.
• The PPATK now has broader investigatory powers, including the power to freeze bank accounts.
• Financial institutions which fail to comply with AML regulations could have their license revoked and their shareholders blacklisted for 5 years.
• Stricter controls are imposed on larger financial institutions and insurance companies.
• PPATK now coordinates with the Australian Transaction Reports and Analysis Center (AUSTRAC) on a variety of projects, including inspections of PPATK systems and workshops for countering money laundering and other financial crimes.

Anti Money Laundering: Indonesia Penalties

Non-compliance with AML regulations in Indonesia can result in a range of potential punishments, including fines of between IDR10 billion and IDR100 billion, and prison sentences of up to 20 years.