Jakarta – Indonesia officially became the 40th full membership of the FATF (Financial Action Task Force on Money Laundering and Terrorism Financing) through a plenary meeting in Paris on October 27, 2023. This membership is very important as a form of international recognition of the effectiveness of the Anti-Money Laundering, Prevention of Terrorism Financing, and Prevention of Financing of Weapons of Mass Destruction Proliferation (APUPPT and PPSPM) regimes in Indonesia. The FATF is an international organization focused on global efforts in combating money laundering, terrorism financing, and financing the proliferation of weapons of mass destruction.
Indonesia’s membership status itself was obtained after going through a series of tests, both from the on-site visit Mutual Evaluation Review (MER) assessment by the FATF team in July-August 2020 and the review that has been carried out at the FATF Plenary Meeting in June 2023. Based on the results of the MER, Indonesia achieved good scores and was given a fast track for membership in the February 2023 FATF Plenary with a focus action plan on aspects of monitoring whistleblower compliance, asset seizure and preventing funding for the proliferation of weapons of mass destruction. Until the second Update of Indonesia’s Action Plan Progress Report prepared last September, Indonesia successfully completed 48 action plan items in accordance with the stipulated time.
Indonesia’s membership in the FATF certainly needs to be welcomed and is expected to increase the credibility of the national economy and a positive perception of the Indonesian financial system, especially the trust that money invested in Indonesia is safe and at low risk of money laundering and terrorism financing. In terms of law enforcement, it is expected that Indonesia can increase the effectiveness of international cooperation through strong support from FATF member country networks to uncover trafficking and trafficking cases across countries/jurisdictions including asset recovery.
Especially considering that Indonesia still faces various problems in ensuring the implementation of money laundering crimes runs effectively. Throughout 2021-2022, PPATK submitted 1,602 reports on the results of the analysis. In its release, the Financial Transaction Reporting and Analysis Center (PPATK) also stated that the total transactions allegedly related to criminal acts reached IDR 183.88 trillion. This figure includes indications of corruption crimes in the first rank with a value of Rp 81.3 trillion, followed by gambling crimes worth Rp 81 trillion, green financial crimes or crimes related to natural resources of Rp 4.8 trillion, narcotics crimes of Rp 3.4 trillion, and embezzlement of foundation funds of Rp 1.7 trillion.
However, Indonesia should be able to increase its efforts in preventing money laundering and terrorism financing after FATF membership. Both in the form of law enforcement and prevention through accelerating the discussion and completion of the Asset Recovery Bill.
Strengthening the Implementation of Beneficial Ownership Transparency
One of the Immediate Outcomes (IO) issued by the FATF and must be ensured by member states is the regulation of legal entities in order to prevent money laundering and terrorism, as well as the unhindered availability of beneficial owner information to the authorities. The achievement of the Indonesian government by regulating the obligation to declare beneficial owners, through Presidential Regulation Number 13 of 2018 concerning the Application of the Principle of Recognizing Beneficial Ownership of Corporations in the Framework of Prevention and Eradication of Money Laundering and Terrorism Financing Crimes and disclosing the information is an important step forward in fulfilling the action plan.
A further challenge of the policy is how then the existence of the principle of recognizing beneficial ownership can be used by law enforcement as an entry point in trapping criminal offenders who hide their identity and proceeds of crime by using corporations and/or other means, which are the real perpetrators/beneficiaries. Against beneficial owners who hide using corporations or other means makes crimes difficult to uncover and has an impact on state losses.
One of the prerequisites is to encourage increased compliance with reporting beneficial owners by legal entities in Indonesia, which since more than 4 (four) years ago until December 2022 has onlyreached 38.47%. Along with that, after becoming a member of the FATF, it is also important for the government to establish a reliable verification mechanism to ensure that this policy of recognizing beneficial owners can achieve its goals. All of this, in the view of civil society coalitions, is impossible if the government, first, does not strengthen sanctions for violations of beneficial owner reporting obligations; Second, it does not provide a channel for public participation, and third, it does not build a firm legal policy to prevent criminalization of people who conduct research related to the accuracy of legal entity beneficial owners.
With these various rooms for improvement, the civil society coalition urges the Government of Indonesia to evaluate and improve various regulations related to beneficial owners, as well as ratify the Criminal Asset Forfeiture Bill.
Sincerely,
1. Auriga Nusantara Foundation
2. ublish What You Pay (PWYP) PWYP Indonesia
3. Transparency International (TI) Indonesia
4. Greenpeace Indonesia
5. Indonesia Corruption Watch (ICW)
Contact Person:
1. Aryanto Nugroho, National Coordinator of PWYP Indonesia: aryanto@pwypindonesia.org
2. Roni Saputra, Law Enforcement Director of Yayasan Auriga Nusantara: roni@auriga.or.id