Countries/Jurisdictions of Primary Concern - Indonesia
Indonesia is neither a regional financial center nor an offshore financial haven, but the country remains vulnerable to money laundering and terrorist financing due to gaps in financial system legislation and regulation, a cash-based economy, weak rule of law, and ineffective law enforcement institutions. Additionally, major indigenous terrorist groups, which obtain financial support from both domestic and foreign sources, are present in the country. These include Jemaah Islamiyah (JI), a loose network of JI spin-off groups including Jemaah Anshorut Tauhid (JAT), and others.
Most money laundering in Indonesia is connected to non-drug criminal activity such as corruption, illegal logging, illegal sale of subsidized fuel, illegal wild animal trafficking, theft, bank fraud, credit card fraud, maritime piracy, sale of counterfeit goods, illegal gambling, and prostitution.
Indonesia has a long history of smuggling of illicit goods and bulk cash, made easier by thousands of miles of unpatrolled coastlines, sporadic and lax law enforcement, and poor customs infrastructure. Proceeds from illicit activities are easily moved offshore and repatriated as needed for commercial and personal use. While Indonesia has made some progress in combating official corruption via a strong, yet embattled, Corruption Eradication Commission, endemic corruption remains a significant concern and poses a challenge for AML/CFT regime implementation.
The FATF has included Indonesia in its Public Statement since February 2012, with the most recent statement issued October 24, 2014. While the FATF noted improvement in Indonesia’s AML/CFT framework, Indonesia has failed to implement its action plan within the agreed upon timelines and lacks an adequate legal framework and procedures for identifying and freezing terrorist assets.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: //2009-2017.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: Combination approach
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks; finance companies; insurance companies and brokers; pension fund financial institutions; securities companies; investment managers; providers of money remittance; and foreign currency traders
Number of STRs received and time frame: 29,035: December 1, 2013 - September 30, 2014
Number of CTRs received and time frame: 1,534,758: December 1, 2013 - September 30, 2014
STR covered entities: Banks and financing companies; insurance companies and brokers; pension fund financial institutions; securities companies, investment managers, custodians, and trustees; postal services as providers of fund transfer services; money remitters and foreign currency changers (money traders); providers of payment cards, e-money, and e-wallet services; cooperatives doing business as savings and loans institutions; pawnshops; commodities futures traders; property companies and real estate agents; car dealers; dealers of precious stones, jewelry, precious metals, art and antiques; and auction houses
money laundering criminal Prosecutions/convictions:
Prosecutions: 0: December 1, 2013 to September 30, 2014
Convictions: 24: December 1, 2013 to September 30, 2014
Records exchange mechanism:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Indonesia is a member of the Asia/Pacific Group on Money Laundering (APG), a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.apgml.org/mutual-evaluations/documents/default.aspx?s=date&c=8b7763bf-7f8b-45c2-b5c7-d783638f3354&pcPage=3
Enforcement and implementation issues and comments:
Indonesia’s financial intelligence unit, known as the PPATK, works closely with the Indonesian central bank to oversee and implement Indonesia’s AML regime. PPATK publishes detailed, lengthy reporting statistics on its website on a monthly basis.
Although Indonesia’s CFT legislation provides for the freezing of terrorist assets linked to the UN list of designated terrorists and terrorist organizations, Indonesia continues to lack an effective mechanism to implement UNSCRs 1267 and 1373. A joint regulation drafted by an Indonesian Counterterrorism Task Force in order to address these concerns is currently under review by international experts. As of December 2014, Indonesia had frozen the assets of all UNSCR 1267/1989 listees but had not yet issued freeze orders for Taliban-related individuals and entities pursuant to UNSCR 1988. To be compliant with international standards and further develop its asset freezing regime, Indonesia must ensure freezing without delay under all relevant sanctions.
Since the CFT law’s inception in March 2013, 15 terrorism finance cases have been brought to court. Corruption, particularly within the police ranks, impedes effective investigations and prosecutions.