Anti-Money Laundering and Counter-Terrorism Financing

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Introduction to AML/CTF

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Background of AML CFT

Financial institutions are very vulnerable to the possibility of being used as a media for money laundering (ML) and terrorism financing (TF), due to many transaction options for perpetrators of crime to commit an offence. Through various transaction options, such as transfer transactions, financial institutions become the entrance of assets that are the proceeds of crime or terrorism financing activities into the financial system which can be utilized for the benefit of perpetrators of crime. For instance, ML perpetrators can withdraw proceed of crime that appear legitimate and conceal the origins of illegally obtained. Whereas, TF perpetrators use proceed of crime to finance terrorist activities.

As the development of products, business model, technology and information become increasingly complex, all Financial Service Providers under the supervision of Bank Indonesia are required to implement the AML and CFT programs optimally and effectively. The AML and CFT program is not only important for eradicating ML and preventing TF, yet also to support the prudential principles which can protect the Service Providers and users from various risks that may arise.


AML CFT to Achieve SPI Vision 2025

The Indonesian Payment System (SPI) 2025 guarantees a balance between innovation and the integrity of the payment system, through the application of Anti-Money Laundering, Counter Financing of Terrorism, and Prevention of Proliferation of Weapon of Mass Destruction Financing as Vision 4 of the SPI 2025 Blueprint "SPI 2025 guarantees a balance between innovation and consumers protection, integrity and stability as well as fair business competition through the application of KYC & AML CFT, the obligation to disclose data/information /public business, and the application of regtech and suptech as obligations in reporting, regulatory and supervisory".

The SPI 2025 Blueprint publication can be downloaded here.


 


Regulations, Provisions and Risk Analysis​

AML CFT Framework at Bank Indonesia

 
The AML CFT Framework was built to support the SPI Vision 2025 and prevent money laundering, terrorism financing, and funding for the proliferation of weapons of mass destruction that pose various risks, including:

 
  1. Threatening economic stability and financial system integrity;
  2. Reducing Indonesia's credibility in the international view;
  3. Increasing investment risk;
  4. The terrorism financing is one form of threat to the country's sovereignty.

 
The outcomes of the AML CFT Implementation on the SPI are as follows:

 
  1. The integrity of the Indonesian financial system that supports economic stability;
  2. The credibility and reputation of Indonesia increases internationally, with compliance with international standards;
  3. The integrity of the Indonesian financial system supports the investment climate;
  4. Terrorism can be mitigated through the prevention of terrorism financing.
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Sectoral Risk Assessment (SRA)

 
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Bank Indonesia has been conducted the risk assessment of Money Laundering (ML), Terrorist Financing (TF), and Financing of Proliferation of Weapons of Mass Destruction (PFWMD) in the sector of Non-Bank Payment Service Providers and Non-Bank Money Changers. The assessment is based on geographic, customer, products and services, and delivery channels. The risk assessment is outlined in the Sectoral Risk Assessment (SRA) which refers to the National Risk Assessment (NRA) on ML, TF, and PFWMD. The purpose of the SRA adjustment as follows:

  1. Identifying and analysing the threats, vulnerabilities and consequences of money laundering, terrorist financing and financing of proliferation of weapons of mass destruction;
  2. Identifying, analysing and evaluating various risks associated with money laundering, terrorist financing and financing of proliferation of weapons of mass destruction based on risk mapping of customer profiles (individual and corporate), regions, products and services as well as delivery channels;
  3. Identifying and analysing new and/or emerging threats posed by money laundering, terrorist financing and financing of proliferation of weapons of mass destruction; and
  4. Formulating strategy measures to mitigate the risk of money laundering, terrorist financing and financing of proliferation of weapons .

NRA on Money Laundering publication can be downloaded here

NRA on Terrorist Financing and Financing of Proliferation of Weapons of Mass Destruction publication can be downloaded here

SRA publications can be downloaded here

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AML CFT Policy ​

 
As a Supervisory and Regulatory Bodies (LPP), Bank Indonesia has issued Bank Indonesia Regulation (PBI) No. 19/10/PBI/2017 concerning the Implementation of Anti-Money Laundering and Countering Terrorism Financing for Non-Bank Payment System Service Providers and Non-Bank Money Changers (PBI AML CFT).

 
The provisions contained in PBI AML CFT became effective in September 2017, targeting Non-Bank Payment System Service Providers as well as Non-Bank Money Changers. The PBI also stipulates the AML CFT requirements specific to payment system service providers and Money Changers as follows:

 
  1. tasks and responsibilities of the directors and active supervision of the Board of Commissioners;
  2. policies and written procedures;
  3. risk-management processes;
  4. human resources management; and
  5. internal control system.

 
In compiling the PBI AML CFT, BI adopts various provisions, including:

 
  1. FATF 40 Recommendations;
  2. Act No. 8 of 2010 concerning the Prevention and Eradication of Money Laundering (ML Act);
  3. Act No. 9 of 2013 on the Prevention and Eradication of Terrorism Financing (TF Act).
PBI AML CFT can be downloaded here

 
Beside issuing the PBI AML CFT, Bank Indonesia also issues other BI Regulations that refer to the PBI AML CFT, including:

  1.  PBI No.14/23/PBI/2012 concerning Fund Transfer;
  2.  PBI No.18/20/PBI/2016 concerning Non-Bank Money Changers;

Payment System regulatory reform as part of the Indonesia Payment System Blueprint (BSPI) 2025 also regulates AML CFT obligations for Non-Bank Payment Service Provider and Non-Bank Money Changers, through the issuance of several PBIs as follows:

  1. PBI No. 22/23/PBI/2020 concerning Payment System
  2. PBI No. 23/6/PBI/2021 concerning Payment Service Providers
  3. PBI No. 23/7/PBI/2021 concerning Payment System Infrastructure Provider.

Bank Indonesia also issued technical guidelines derived from the PBI AML CFT, including:

  1. Guidelines on the implementation of Risk Based Approach of AML CFT (RBA);
  2. Guidelines on Know Your Customer (Customer Due Diligence) for Non-Bank Payment System Service Providers and Non-Bank Money Changers.
  3. Guidelines on the implementation of immediate blocking of fund owned by individuals or corporations the identities of which are listed in the List of Suspected Terrorists and Terrorist Organizations (DTTOT);
  4. Guidelines on the implementation of immediate blocking of fund owned by individuals or corporations the identities of which are listed in the List of Funding of Proliferation of Weapons of Mass Destruction;
In order to optimize efforts to mitigate ML, TF, and PFWMD, Bank Indonesia has compiled a Typology Study of ML, TF, and PFWMD for Non-Bank Payment Service Provider and Non-Bank Money Changers. This study is expected to increase the awareness and become a risk mitigation guideline for Non-Bank Payment Service Providers, Non-Bank Money Changers, Law Enforcement Agencies (APH), and other relevant authorities to identify the typology undertaken by the perpetrators in the context of mitigating money laundering, terrorism financing, and proliferation of weapons of mass destruction.

Typology Study of ML, TF, and PFWMD for Non-Bank Payment Service Provider and Non-Bank Money Changers 2021 can be downloaded here.

Technical Guidelines AML CFT

 
Risk Based Approach (RBA)

 
In accordance with FATF Recommendation No. 1, Providers must identify and understand the risks of money laundering and terrorism financing covering geographic, customer, products and services, and delivery channels. As well as referring to the PBI AML CFT, Risk Based Approach (RBA) is used to improve the quality of supervision in order to prevent misuse of Non-Bank Payment System Service Providers and Non-Bank Money Changers as media for money laundering and / or terrorism financing.
The application of a Risk Based Approach (RBA) includes:

 
  1. Offsite and onsite risk-based supervision with risk ranking monitoring tools and RBA working papers;
  2. The Providers uses the RBA of AML CFT to conduct risk and operational assessments.
 
Guidelines for the Implementation of Risk Based Approach (RBA) for Non-Bank Money Transfer Services Providers and Non-Bank Money Changers can be downloaded here

 
Guidelines for the Implementation of Risk Based Approach (RBA) for Non-Bank E-Money and E-Wallet Issuers also Non-Bank Issuers of Card Based Payment Instrument can be downloaded here

 

 
Guideline on Know Your Customer (Customer Due Diligence) for Non-Bank Payment System Services Providers and Non-Bank Money Changers

 
In general, the procedures and mechanisms of Customer Due Diligence (CDD) implementation are regulated in accordance with the PBI AML CFT. To facilitate greater understanding amongst Service Providers in terms of meeting and conducting CDD as mandated by the PBI AML CFT, Bank Indonesia published the CDD guidelines for Non-Bank Payment System Providers and Non-Bank Money Changers.

 
Some highlights in the CDD guidelines are as follows:

 
  1. CDD guidelines are a reference that must be followed by Providers in implementing the CDD process for Service Providers, Service Users and beneficial owners, both conventional and electronic CDD (e-CDD).
  2. The application of e-CDD is the same as the application of conventional CDD, namely Simple CDD, Standard CDD, and Enhanced Due Diligence (EDD), by carrying out 4 (four) stages, namely identification, verification, on-going due diligence, and understanding the intentions and the purpose of the relationship.
  3. Providers implementing e-CDD, in principle, must comply with the rules regarding CDD implementation that have been stipulated in the PBI AML CFT, including applying e-CDD to Beneficial Owners.
  4. In case Service Provider carries out one of the e-CDD processes, the implementation of the process shall be carried out with due observance of the implementation of the e-CDD process which is stated in this Guideline.
 
Guidelines of Know Your Customer/Customer Due Diligence (CDD) Principles for Non-Bank Payment System Service Provider and Non-Bank Money Changer can be downloaded here.


List of Suspected Terrorists and Terrorist Organizations (DTTOT)

 
Based on Act No. 9 of 2013 concerning the Prevention and Eradication of Terrorism Financing, terrorism financing is defined as the direct or indirect use of funds for terrorist acts.  The scope of terrorism financing includes direct and indirect actions to make available, accumulate, provide or lend funds to terrorists or for terrorist acts, including the proceeds of crime or legally obtained wealth.

 
Suspicious Financial Transactions on TF are:
  1. Financial transactions with the intent to be used and / or which are known to be used to commit terrorism; or
  2. Transactions involving Persons or Corporations whose name is listed in DTTOT.
Legal Provisions Relating to the DTTOT
  1. Act No. 9 of 2013 on the Prevention and Eradication of Terrorism Financing (TF Act);
  2. Joint Regulation of the Supreme Court, the Indonesian Minister of Foreign Affairs, the Chief of Police, the Head of the National Agency for Counterterrorism (BNPT) and Head of the Financial Transaction Reporting and Analysis Center (PPATK) on the Inclusion of Identity of Persons and Corporations in DTTOT and Immediate Blocking of the Funds of Persons or Corporations whose name is Listed in DTTOT;
  3. Bank Indonesia Regulation (PBI) No. 19/10/PBI/2017 concerning the Implementation of Anti-Money Laundering and Countering Terrorism Financing for Non-Bank Payment System Service Providers and Non-Bank Money Changers (PBI AML CFT). 

     

    In accordance with Financial Action Task Force (FATF) Recommendation No. 6, Bank Indonesia forwarding the Indonesian National Police letter related to DTTOT information and blocking orders to all Non-Bank Payment System Service Providers and Non-Bank Money Changers, followed up with the obligation to immediately blocking all funds owned or controlled, by any person or corporation listed in the DTTOT. Guidelines on the implementation of immediate blocking of fund owned by individuals or corporations the identities of which are listed in the list of suspected terrorists and terrorist organizations can be downloaded here

     

    The complete list of Suspected Terrorists and Terrorist Organizations (DTTOT) and the Immediate Blocking of Funds owned by Persons or Corporations Listed in DTTOT can be downloaded here

DTTOT Flow of Information
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​UNSC; Ministry of Foreign Affairs; National Police; Central Jakarta District Court; Bank Indonesia; Payment System Service Providers/Money Changers
DTTOT Flow of Information; Flow of Information from Service Providers
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List of Financing the Proliferation of Weapons of Mass Destruction (WMD)
Based on the Joint Regulation of the Minister of Foreign Affairs of the Republic of Indonesia, Chief of the National Police of the Republic of Indonesia, Chairperson of the Indonesian Financial Transaction Reports and Analysis Centre (INTRAC) and Chairperson of the Nuclear Energy Supervisory Agency, WMD proliferation is defined as the proliferation of nuclear, biological and chemical weapons using the proceeds of crime or wealth obtained legally.

Legal Provisions Relating to the Proliferation of Weapons of Mass Destruction
  1. Joint Regulation of the Minister of Foreign Affairs of the Republic of Indonesia, Head of the Indonesian National Police, Head of the Center for Reporting and Analysis of Financial Transactions, and Head of the Nuclear Energy Supervisory Agency on Inclusion of Identity of Persons and Corporations in the List of Funds for the Proliferation of Weapons of Mass Destruction and Blocking and Accidental Ownership of Owned Funds or Corporations that are listed on the list of funding for the proliferation of weapons of mass destruction.
  2. Bank Indonesia Regulation (PBI) No. 19/10/PBI/2017 concerning the Implementation of Anti-Money Laundering and Countering Terrorism Financing for Non-Bank Payment System Service Providers and Non-Bank Money Changers (PBI AML CFT). 

     

    In accordance with Financial Action Task Force (FATF) Recommendation No. 7, Bank Indonesia transmits information on the proliferation of weapons of mass destruction from PPATK to the providers and is followed up with the obligation to immediately block all funds owned or controlled, directly or indirectly, by persons or Corporations based on the Register of Proliferation of Weapons of Mass Destruction. Guidelines on the implementation of immediate blocking of fund owned by individuals or corporations the identities of which are listed in the list of funding of proliferation of weapons of mass destruction can be downloaded here

     

    The complete List of Proliferation of Weapons of Mass Destruction Financing can be downloaded here
Flow of Information concerning Financing the Proliferation of Weapons of Mass Destruction
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UNSC; Ministry of Foreign Affairs; Indonesian Financial Transaction Reports and Analysis Centre (INTRAC); Bank Indonesia; Payment System Service Providers/Money Changers
WMD Proliferation Flow of Information; Flow of Information from Service Providers

 
Information concerning the List of Suspected Terrorists and Terrorist Organisations (DTTOT) and List of Financing the Proliferation of Weapons of Mass Destruction (WMD) is available for download. 

Membership and Cooperation


National and International Cooperation related to AML CFT

BI continues to expand the AML CFT cooperation with relevant authorities, both national and international in order to strengthen the implementation of AML CFT.


  1. National Cooperation
    Bank Indonesia continues to actively and continuously coordinate with the Financial Transaction Reports and Analysis Center (PPATK), the Corruption Eradication Commission (KPK), the Financial Services Authority (OJK), the Indonesian National Police (POLRI), the National Narcotics Agency (BNN), Ministry of Finance, and other relevant agencies to strengthen the implementation of AML CFT.
  2. International Cooperation
    Bank Indonesia is actively cooperating with Bank Negara Malaysia(BNM), Bangko Sentral ng Pilipinas(BSP), Bank of Thailand(BoT),Brunei Darussalam Central Bank (BDCB), Central Bank of United Arab Emirates (CBUAE), Monetary Authority of Singapore (MAS), as well as other international institutions. BI continues to make efforts to expand AML/CFT cooperation with other foreign authorities.



a.    Membership in the APG

APG Profile 

Asia / Pacific Group on Money Laundering is a regional organization (Asia Pacific) to prevent and eradicate money laundering, terrorist financing, and proliferation funding activities. Indonesia has been a member of APG since 2001.

Mutual Evaluation 

Every country that is a member of APG is committed to implementing Mutual Evaluation (ME) to assess the level of compliance with FATF Recommendations as an international standard of Anti-Money Laundering and Counter Financing of Terrorism (AML CFT).

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APG Mutual Evaluation Result

The 21st Asia / Pacific Group (APG) on Money Laundering session held on July 21-27 2018 in Kathmandu, Nepal, has ratified the Indonesian Mutual Evaluation Report (MER). The MER is the result of a review of Indonesia's compliance and effectiveness of anti-money laundering and terrorism financing regimes that are based on 40 Financial Action Task Force (FATF) recommendations.

Assessment of compliance with efforts to prevent and eradicate criminal acts of money laundering and financing of terrorism is carried out in a professional and objective manner. The MER Indonesia assessor team has representatives from the United States, Canada, Macao-China, China-Taipei, Pakistan and Bangladesh and the APG Secretariat.

The APG Annual Session in Kathmandu, Nepal has determined that compliance and effectiveness of Indonesia's implementation of international standards in the field of prevention and eradication of criminal acts of money laundering and financing of terrorism, is considered to be very adequate. Of the 40 FATF recommendations related to legal framework compliance, Indonesia received a 'C' (compliant) rating or the highest score for 6 recommendations. Then got an 'LC' (Largely Compliant) rating for 29 recommendations, and got a 'PC' (Partially Compliant) rating for 4 recommendations. Of the overall recommendations there is only one recommendation in which Indonesia received a 'NC' (Non-Compliant) rating, namely on recommendations related to funding for the proliferation of weapons of mass destruction.

Regarding the effectiveness of implementation, Indonesia received a Substantial rating for 5 Immediate Outcomes (IO), then a Moderate rating for 5 IO, as well as a Low rating for 1 IO related to funding for the proliferation of weapons of mass destruction. The results of the assessment indicate that the effectiveness of the implementation of APU / PPT in Indonesia is better when compared to APG countries such as Australia, Malaysia and Singapore.

The complete report of Indonesia's APG Mutual Evaluation Report (MER) can be downloaded here


b.    Preparation towards FATF Full Membership

The Financial Action Task Force on Money Laundering (FATF) is an inter-governmental organization formed in 1989 by the G-7 with the aim of developing systems and infrastructure to prevent and combat money laundering, terrorism financing, and funding for the proliferation of weapons of mass destruction.

FATF sets standards, namely FATF 40 Recommendations and procedures (policy making) and encourages the effectiveness of its implementation through legal instruments, regulations and other media (recommendations) to combat money laundering, terrorist financing and weapons of mass destruction that will threaten the integrity of the financial system. In its operations, FATF monitors the implementation of recommendations issued to its members, reviews technical and eradication media and encourages the implementation of its recommendations globally

Benefits of Being a Full Member
  1. Acceleration to become a country recognized as having high financial system integrity by applying international standards to prevent crime in the financial sector.
  2. Be a strong footing going forward for the development of Indonesia's economy in the world, where this can improve Indonesia's ranking in various aspects, including investment.
  3. A means to demonstrate Indonesia's leadership as a major country, especially in Asia and emerging markets, which of course can have a positive impact on the development of the domestic economy.
  4. Can play an active and foremost role in setting AML CFT international standards that are beneficial for the development of the domestic AML CFT framework and the preparation of future policy responses for emerging markets.
  5. The effectiveness of the formulation of stance between Indonesia and Bank Indonesia, especially in discussions in international forums.
 

Roadmap towards FATF Membership for Indonesia
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BI's Strategy in supporting Indonesia to become a FATF Full Member

In supporting the Government's efforts to become a Full Member of FATF, Bank Indonesia has prepared 3 strategies, namely

  1. Fulfillment of all FATF recommendations for the payment system sector and foreign exchange business activities in preventing and eradicating money laundering, terrorism financing, as well as the proliferation of weapons of mass destruction financing.
    The effective application of AML-CFT principles is believed to be able to support the integrity of the financial system in Indonesia, increase Indonesia's credibility and reputation, and comply with applicable international AML-CFT standards. In the context of setting the AML-CFT principles, BI has issued provisions and guidelines regarding the implementation of the AML-CFT program for Non-Bank Payment System Service Providers (PJSP) and Non-Bank Money Changers (KUPVA BB) and Financial Technology provisions. In the context of risk assessment, Bank Indonesia also prepared a Sectoral Risk Assessment (SRA) and Risk Based Approach (RBA) Guidelines for PJSP SB & KUPVA BB and contributed to the preparation of a National Risk Assessment (NRA), Regional Risk Assessment (RRA) on Corruption and SRA Virtual. Joint assets of related Ministries / Agencies that are coordinated by PPATK. In the context of payment system supervision, a risk-based approach is applied both by Providers and by BI itself. This is also stated in the new PBI AML-CFT which requires the Providers to apply a risk-based approach (RBA) in the implementation of AML-CFT. Meanwhile in terms of Supervision, the risk-based approach is applied both by the providers and by Bank Indonesia itself. This is also outlined in the new AML-CFT Regulation which requires Providers to implement a risk-based approach (RBA) in implementing AML-CFT.
  2. Increasing public awareness and institutional cooperation in preventing and eradicating money laundering, terrorism financing, and funding for the proliferation of weapons of mass destruction.
    In terms of increasing public awareness, Bank Indonesia has educated the public to use licensed PJSP and KUPVA BB. In the context of institutional cooperation, Bank Indonesia collaborates with ministries and institutions in Indonesia, including with the police to curb unlicensed Non-Bank Money Changers (KUPVA BB) and illegal Non-Bank Fund Transfers (PTD BB) in Indonesian territory. Control against unlicensed Providers and the application of the Quick Response (QR) Code on the KUPVA BB and PTD BB logos are forms of protection for the public from money laundering and terrorism financing activities. In order to improve the implementation of the AML and CFT programs, Bank Indonesia has also strengthened cooperation and coordination intensively with relevant authorities such as the PPATK, BNN, and KPK to ensure the effectiveness of its implementation. In the context of international cooperation, Bank Indonesia is actively cooperating with Bank Negara Malaysia, Bangko Sentral ng Pilipinas, Bank of Thailand, and other international institutions.
  3. Improved coordination with Ministries and Institutions in the TPPU Committee in the technical preparation of the FATF Mutual Evaluation for Indonesia, particularly in sectors under the authority of Bank Indonesia.

Education and Campaign
Suggestion of Strengthening AML CFT in Responds of Covid-19 Pandemic

In May 2020, FATF had published the suggestion related to challenges, good practices and policies in responding of Money Laundering and Terrorist Financing threats and vulnerabilities namely COVID-19 related Money Laundering and Terrorist Financing - Risk and Policy Responses.

The suggestion including:

  1. Coordinate domestically and effective communication need to be done between Government and Providers related to the effect of COVID-19 pandemic in AML CFT Program.
  2. Urge Providers to use Risk Based Approach in doing their Know Your Customer or Customer Due Diligence.
  3. Urge Providers to apply electronic and digital payment.

Bank Indonesia also suggests its Providers (Non-Bank Payment System Service Providers and Money Changers) to stay vigilant during Covid-19 pandemic.

Bank Indonesia suggestion including:

  1. Awareness
    Understand the risk of Money Laundering and Terrorist Financing related to the effect of COVID-19 in their businesses.
  2. Adapt
    Assess the impact of COVID-19 to Provider's AML CFT policy according to FATF recommendation, e.g. expansion the implementation of electronic and digital payment and the implementation of electronic Know Your Customer (e-KYC) or Customer Due Diligence (CDD).
  3. Action
    Encourage in using risk based approach and coordinate with related Institutions also Supervisor in Bank Indonesia.

Suggestion from FATF which is COVID-19 related Money Laundering and Terrorist Financing - Risk and Policy Responses can be downloaded here


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Relevant Press Releases and Latest Info
Campaign Material

 
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#CombatingMoneyLaundering
# CombatingTerrorismFinancing
Let’s Transact Safely and Securely
Use Licensed Money Changers and Funds Transfer Service Providers
Present National Identification Card to initiate transaction or payment
Report Unlicensed Money Changers and Funds Transfer Service Providers to Bank Indonesia
Violators are Subject to Imprisonment and Fines
(Act No. 8 of 2010 and Act No. 9 of 2013)

 

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