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APG Mutual Evaluation Report Indonesia Anti-money laundering and counter-terrorist financing measures Indonesia Mutual Evaluation Report September 2018 The Asia/Pacific Group on Money Laundering (APG) is an autonomous and collaborative international organisation founded in 1997 in Bangkok, Thailand consisting of 41 members and a number of international and regional observers. Some of the key international organisations who participate with, and support, the efforts of the APG in the region include the Financial Action Task Force, International Monetary Fund, World Bank, OECD, United Nations Office on Drugs and Crime, Asian Development Bank and the Egmont Group of Financial Intelligence Units. APG members and observers are committed to the effective implementation and enforcement of internationally accepted standards against money laundering and the financing of terrorism, in particular the Forty Recommendations of the Financial Action Task Force on Money Laundering (FATF). For more information about the APG, please visit the website: www.apgml.org. This mutual evaluation report was adopted by the APG at its annual meeting in July 2018. Citing reference: APG (2018), Anti-money laundering and counter-terrorist financing measures - Indonesia, Third Round Mutual Evaluation Report, APG, Sydney http://www.apgml.org/includes/handlers/get-document.ashx?d=91e933b2-a5ba-4304-a9f4- a78c1d825d14 © October 2018 APG No reproduction or translation of this publication may be made without prior written permission. Applications for permission to reproduce all or part of this publication should be made to: APG Secretariat Locked Bag A3000 Sydney South New South Wales 1232 AUSTRALIA Tel: +61 2 9277 0600 E mail: [email protected] Web: www.apgml.org Cover image courtesy of: Lonely Planet TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................................................................................. 3 A. Key findings ........................................................................................................................................ 3 B. Risks and general situation .................................................................................................................. 5 C. Overall level of effectiveness and technical compliance ..................................................................... 6 D. Priority actions ................................................................................................................................. 11 E. Effectiveness and technical compliance ratings ............................................................................ 13 MUTUAL EVALUATION REPORT OF INDONESIA ..................................................................................... 14 Preface ....................................................................................................................................................... 14 CHAPTER 1. ML/TF RISKS AND CONTEXT ................................................................................................ 15 ML/TF risks and scoping of higher-risk issues ...................................................................................... 15 Materiality ................................................................................................................................................. 18 Structural elements .................................................................................................................................. 19 Background and other contextual factors .............................................................................................. 19 CHAPTER 2. NATIONAL AML/CFT POLICIES AND COORDINATION ...................................................... 27 Key findings and recommended actions ................................................................................................ 27 Immediate Outcome 1 (Risk, Policy and Coordination) ........................................................................ 28 CHAPTER 3. LEGAL SYSTEM AND OPERATIONAL ISSUES ...................................................................... 33 Key findings and recommended actions ................................................................................................ 33 Immediate Outcome 6 (Financial intelligence ML/TF) ......................................................................... 35 Immediate Outcome 7 (ML Investigation and Prosecution) ................................................................. 43 Immediate Outcome 8 (Confiscation) ..................................................................................................... 49 CHAPTER 4. TERRORIST FINANCING AND FINANCING OF PROLIFERATION ....................................... 57 Key findings and recommended actions .................................................................................................... 57 Immediate Outcome 9 (TF Investigation and Prosecution) ....................................................................... 59 Immediate Outcome 10 (TF Preventive Measures and Financial Sanctions) ............................................ 65 Immediate Outcome 11 (PF Financial Sanctions) ..................................................................................... 70 CHAPTER 5. PREVENTIVE MEASURES ...................................................................................................... 73 Key findings and recommended actions .................................................................................................... 73 Immediate Outcome 4 (Preventive Measures) ........................................................................................... 74 CHAPTER 6. SUPERVISION ......................................................................................................................... 85 Key findings and recommended actions .................................................................................................... 85 Immediate Outcome 3 (Supervision) ......................................................................................................... 86 CHAPTER 7. LEGAL PERSONS AND ARRANGEMENTS ............................................................................. 97 Key findings and recommended actions .................................................................................................... 97 Immediate Outcome 5 (Legal Persons and Arrangements) ....................................................................... 98 CHAPTER 8. INTERNATIONAL COOPERATION ....................................................................................... 107 Anti-money laundering and counter-terrorist financing measures in Indonesia 2018 @ APG 2018 1 Key findings and recommended actions .................................................................................................. 107 Immediate Outcome 2 (International Cooperation) ................................................................................. 108 TECHNICAL COMPLIANCE ANNEX ........................................................................................................... 117 Recommendation 1 – Assessing risks and applying a risk-based approach ............................................ 117 Recommendation 2 – National cooperation and coordination ................................................................. 120 Recommendation 3 – Money laundering offence .................................................................................... 122 Recommendation 4 – Confiscation and provisional measures ................................................................ 124 Recommendation 5 – Terrorist financing offence ................................................................................... 127 Recommendation 6 – Targeted financial sanctions related to terrorism and terrorist financing ............. 128 Recommendation 7 – Targeted financial sanctions related to proliferation............................................. 132 Recommendation 8 – Non-profit organisations ....................................................................................... 135 Recommendation 9 – Financial institution secrecy laws ......................................................................... 138 Recommendation 10 – Customer due diligence ...................................................................................... 139 Recommendation 11 – Recordkeeping .................................................................................................... 144 Recommendation 12 – Politically exposed persons (PEPs) ..................................................................... 145 Recommendation 13 – Correspondent banking ....................................................................................... 147 Recommendation 14 – Money or value transfer services (MVTS) ......................................................... 147 Recommendation 15 – New technologies ................................................................................................ 148 Recommendation 16 – Wire transfers ...................................................................................................... 149 Recommendation 17 – Reliance on third parties ..................................................................................... 151 Recommendation 18 – Internal controls and foreign branches and subsidiaries ..................................... 151 Recommendation 19 – Higher-risk countries .........................................................................................
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