BETAHITA.ID – Civil society groups in Indonesia are calling for concrete action to strengthen the implementation of transparency in the application of principles that recognize beneficial ownership, considering that Indonesia has officially become a full member of the 40th FATF (Financial Action Task Force on Money Laundering and Terrorism Financing) through a plenary meeting in Paris, 27 October 2023.

In its official statement, the group explained that Indonesia’s membership is essential as a form of proof and international recognition of the effectiveness of the Anti-Money Laundering, Prevention of Financing of Terrorism, and Prevention of Financing of Proliferation of Weapons of Mass Destruction (APUPPT and PPSPM) regime in Indonesia. FATF is an international organization that focuses on global efforts to eradicate money laundering, terrorism financing, and the financing of the proliferation of weapons of mass destruction.

Indonesia’s membership status was obtained after going through a series of tests, both from the Mutual Evaluation Review (MER) on-site visit assessment by the FATF team in July-August 2020 and the review that was carried out at the FATF Plenary Meeting in June 2023.

Based on the MER results, Indonesia achieved a good score. It was given a fast-track path for membership at the February 2023 FATF Plenary with an action plan focused on monitoring reporting party compliance, asset forfeiture, and preventing the financing of proliferation of weapons of mass destruction. Until the second update of Indonesia’s Action Plan Progress Report was compiled last September, Indonesia completed 48 action plan items by the specified time.

Auriga Nusantara Foundation Law Enforcement Director Roni Saputra said Indonesia’s membership in FATF certainly needs to be welcomed and is expected to increase the credibility of the national economy and positive perceptions of Indonesia’s financial system, especially the belief that money invested in Indonesia is safe and has a low risk of money laundering and terrorism financing.

“In terms of law enforcement, it is hoped that Indonesia can increase the effectiveness of international cooperation through the strong support of the network of FATF member countries to uncover cross-country/jurisdictional ML and TPPT cases, including asset recovery,” said Roni, Thursday (23/11/2023).

Roni said that Indonesia still needs to work on effectively implementing money laundering. Throughout 2021-2022, PPATK submitted 1,602 analysis reports. In its release, said Roni, the Financial Transaction Reports and Analysis Center (PPATK) also stated that the total transactions suspected of being related to criminal acts reached IDR 183.88 trillion.

This figure includes indications of corruption crimes in the first rank with a value of Rp81.3 trillion, followed by gambling crimes worth Rp81 trillion, green financial crime or crimes related to natural resources of Rp4.8 trillion, narcotics crimes of Rp3.4 trillion, and embezzlement of foundation funds of Rp1.7 trillion.

However, Roni continued that Indonesia should be able to increase its efforts in preventing money laundering and terrorism financing after FATF membership, both in law enforcement and prevention, by accelerating the discussion and completion of the Asset Forfeiture Bill.

Roni elaborated that one of the Immediate Outcomes (IO) issued by FATF that member countries must ensure is the regulation of legal entities to prevent money laundering and terrorism, as well as the availability of beneficial owner information for the authorities without obstacles.

The Indonesian government’s achievement by regulating the obligation to report beneficial owners through Presidential Regulation No. 13/2018 on the Implementation of the Principle of Recognizing the Beneficial Ownership of Corporations in the Context of Preventing and Eradicating the Criminal Acts of Money Laundering and the Criminal Acts of Financing Terrorism, and disclosing the information is an important step forward to fulfill the action plan.

According to Roni, the further challenge of the policy is how the existence of the principle of recognizing beneficial ownership can be used by law enforcement as an entry point in ensnaring criminal offenders who hide their identity and proceeds of crime by using corporations and other means, which are the actual perpetrators/beneficiaries. Beneficial owners who hide using corporations or other means cause crimes challenging to uncover and impact state losses.

“One of the prerequisites for that is to encourage an increase in compliance with the reporting of beneficial owners by legal entities in Indonesia, which since more than four years ago, running until December 2022, has only reached 38.47%,” said Roni.

Along with that, after becoming a member of the FATF, it is also essential for the government to establish a reliable verification mechanism to ensure that this policy of recognizing beneficial owners can achieve its objectives. In the view of the civil society coalition, all of this is only possible to achieve if the government first strengthens sanctions against violations of the beneficial owner reporting obligation.

“Second, it does not provide channels for public participation, and, third, it does not build firm legal politics to prevent criminalization of people who conduct research related to the accuracy of legal entity beneficial owners,” said Roni.

Roni added, with various spaces for improvement, civil society groups, including the Auriga Nusantara Foundation, Publish What You Pay (PWYP) Indonesia, Transparency International (TI) Indonesia, Greenpeace Indonesia, and Indonesia Corruption Watch (ICW), urged the Indonesian Government to evaluate and improve various regulations related to beneficial owners, as well as approve the Draft Law on Criminal Asset Forfeiture.