Anti-Money Laundering and Counter-Terorist Financing Measures Indonesia

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I ndonesia 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.Publication short description