Consolidated assessment ratings – Indonesia’s measures to combat money laundering and terrorist financing

On 27 April 2023, the FATF has published its latest update to its Consolidated assessment ratings together with the publication of the Mutual Evaluation Report on Indonesia’s measures to combat money laundering and terrorist financing on progress in strengthening measures to tackle money laundering and terrorist financing.
CONSOLIDATED ASSESSMENT RATINGS
The updated Consolidated assessment ratings provide an up-to-date overview of all assessed countries concerning the effectiveness and technical compliance with the FATF Recommendations, using the FATF Methodology together with the FATF 4th Round Procedures. These ratings should be read in conjunction with the detailed Mutual Evaluations. All these documents are available on the FATF website.
This update of FATF’s Consolidated assessment ratings incorporates the findings of the Mutual Evaluation Report on Indonesia’s measures to combat money laundering and terrorist financing on progress in strengthening measures to tackle money laundering and terrorist financing (see national details below).
Indonesia’s current characteristics on both the effectiveness of AML/CFT systems, as well as technical compliance with the FATF Recommendations are the following:
#### Effectiveness Ratings
Note: Effectiveness ratings can be either a High-HE, Substantial-SE, Moderate-ME, or Low-LE, level of effectiveness.

#### Technical Compliance Ratings
Note: Technical compliance ratings can be either a C-compliant, LC-largely compliant, PC-partially compliant or NC-non compliant.

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MUTUAL EVALUATION REPORT ON INDONESIA’S MEASURES TO COMBAT MONEY LAUNDERING AND TERRORIST FINANCING
The FATF report on Indonesia provides an analysis of the country’s AML/CFT measures as of August 2022.
The report evaluates Indonesia’s compliance with the FATF 40 Recommendations and the effectiveness of its AML/CFT system, and provides recommendations for strengthening the system. The report finds that Indonesia has taken steps to strengthen its AML/CFT framework since its last APG evaluation, particularly in relation to stronger risk assessment tools and processes and ensuring transparency and beneficial ownership information of legal persons. However, the report recommends that Indonesia enhance the targeted outreach and oversight activity for the NPOs identified as most vulnerable to terrorist financing abuse and the implementation of targeted financial sanctions.
Indeed, the report finds that Indonesia has a good understanding of its ML/TF risks, as reflected in its public NRAs and thematic and sectoral risk assessments. The country has established national AML/CFT policies, strategies, and activities to address the identified risks, and national coordination and cooperation on AML/CFT issues at both the policy and operational levels is strong. However, the assessment of ML risks of environmental crimes (e.g., forestry and illegal logging) and organized crime networks, as well as NPOs, needs deeper consideration.
Indonesia proactively investigates, prosecutes, and convicts a range of TF activity, in line with its identified risks in this area. The country employs a multi-pronged approach focused on de-radicalization and counter-radicalization, which has elements of CFT measures. However, NPO risks have not been wholly understood, and at-risk NPOs have not been targeted for outreach or proportionate measures on an ongoing and systematic basis.
Indonesia has put in place a legislative framework for the implementation of TFS, although challenges related to the implementation of TF-TFS without delay remain. The process for the domestic implementation of UN 1267/1988 listings on the AQ/ISIL Sanctions List and Taliban Sanctions List (and for designations under the UNSCR 1373) requires agreement by the DTTOT (Indonesia’s List of Suspected Terrorists and Terrorist Organizations) Task Force and subsequent approval by the Central Jakarta District Court. NPO risks have not been wholly understood, and at-risk NPOs have not been targeted for outreach or proportionate measures on an ongoing and systematic basis.
Indonesia has a strong legal and institutional framework to investigate ML, which it uses to pursue ML activity primarily as a means of asset identification and recovery rather than parallel to the predicate investigation. The country has a legal and organizational framework for asset recovery, which is well socialized among LEAs and public prosecutors. However, Indonesia is less effective in recovering assets located abroad, and the statistics show that the total sums relating to transnational asset recovery confiscated are not in line with the risks in this area.