Indonesia to Join FATF, Opportunity to Foster Agility to Combat Money Laundering and Terrorism Financing

DigitalCFO Newsroom | 30 September 2022

Sri Mulyani, Minister of Finance, Indonesia

Partnering with the Institute of Chartered Accountants in England and Wales (ICAEW), the Business 20 (B20) Integrity and Compliance Task Force successfully held a conference on 28 September, bringing together experts from ICAEW, HM Revenue and Customs, Bank Central Asia, Bank Negara Indonesia, EY, and the Indonesian Financial Transaction Reports and Analysis Centre (PPATK). The half-day hybrid conference discussed countermeasures against money laundering and terrorism financing, putting a spotlight on policy recommendations made by the B20 task force to foster agility in fighting these economic crimes.

Indonesia’s B20 Integrity and Compliance Task Force, which monitors environmental, social, and governance (ESG) issues, provides actionable policy recommendations to overcome business challenges like money laundering and terrorism financing in the country. In terms of risk level, corruption and money laundering are still major issues in ESG talks. ICAEW is a key member of the task force that is fully committed to embracing the cause by introducing key policy recommendations and supporting the nation’s journey to join the Financial Action Task Force (FATF), which will be a great platform to develop a financial system against economic crimes.

Mark Billington, Managing Director International at ICAEW

During his opening speech, Mark Billington, Managing Director International at ICAEW, said, “ICAEW sees that Indonesia’s G20 presidency in 2022 is an ideal time for governments to agree on tangible actions against economic crimes, especially money laundering. With countries recovering from the pandemic facing economic challenges and new technology presenting opportunities for criminal activities, the public and private sectors must work hand in hand to put in place strong countermeasures against economic crimes. We have been persistent in providing guidance and resources to members and nations around the globe, as well as robust anti-money laundering supervision through a risk-based approach, and we will continue to do so.”

Representing the Indonesian government, Sri Mulyani, Minister of Finance of the Republic of Indonesia, expressed her support for the cause during her keynote speech. “As a member of the AML CFT Committee, the Ministry of Finance is continuously improving the quality of money laundering prevention or those related to illicit financing, and also supports the effort of the financial sector in building credibility and integrity of the state treasury management. To prevent and eradicate money laundering and economic crime, last year Ministry of Finance and PPATK signed a memorandum of understanding for the prevention and eradication of money laundering and terrorist financing. This memorandum of understanding between the Ministry of Finance and PPATK is also a sign of the government’s full support for the prevention and eradication of money laundering and terrorist financing. In addition, it also served as a guideline in carrying out the cooperation between the Ministry of Finance and PPATK. The scope of our MOU also includes data and information exchange.”

To combat money laundering and terrorism financing, Indonesia established PPATK in 2002. The organisation acts as the country’s independent financial intelligence unit to fight financial crimes and is expected to play a pivotal role in the process of Indonesia becoming a full member of FATF. The mission is in line with the direction of the President of the Republic of Indonesia during the commemoration of the two decades of the Anti-Money Laundering and Prevention of Terrorism Financing (AML/CFT) regime in Indonesia.

Tuti Wahyuningsih, Director of Strategy and International Cooperation, Financial Transaction Reports and Analysis Center (PPATK) who was also present at the conference, said, “We believe that fostering agility in measures to combat money laundering and economic crimes as per the B20 task force’s recommendation has strategic importance in growing alertness in preventive measures to combat the risk of money laundering/terrorist financing. Meeting this recommendation will be a valuable way for Indonesia to become a full member of the Financial Action Task Force on Money Laundering (FATF), especially on encouraging the cooperation between government agencies and reporting entities in the AML/CFT regime.”

Tuti Wahyuningsih also added that PPATK continues to maximise its role as part of the AML/CFT system in Indonesia, with the development of strategic steps from PPATK in encouraging efforts to combat money laundering and economic crime. First, PPATK launched the National Risk Assessment on Money Laundering and Terrorist Financing/Proliferation Financing (NRA on ML/TF/PF) in 2021. This NRA is an effort to identify, analyse, and evaluate various risks of money laundering, terrorist financing, as well as the proliferation of weapons of mass destruction, both within the scope of domestic and foreign risks. Second, PPATK has implemented collective action related to financial integrity by initiating the formation of the Public-Private Partnership (PPP). The purpose of the PPP on AML/CFT is to build a venue for discussion between the government and the private sector to become more effective and efficient in handling cases of money laundering and asset recovery. And last but not least, PPATK has encouraged more robust measures in combatting the risk of money laundering/terrorism financing by using the latest information technology systems including GoAML, SIPENDAR, SIPESAT, and SEJATI. 

Meanwhile, Haryanto T. Budiman, Chair of the B20 Integrity and Compliance Task Force, said, “On August 18th, 2022, we organised the B20/G20 dialogue to formally introduce four policy recommendations to G20 representatives and the public. The first is about promoting sustainable governance in business to support ESG initiatives. The second policy recommendation is to foster collective action to alleviate the integrity risk. And the third policy recommendation is about fostering agility in counteract measures to combat money laundering/terrorist financing risk. And this is the main topic of today’s discussion. While the fourth policy recommendation is about strengthening governance to mitigate exacerbated cybercrime risks, there’s a real need for us to adapt and enhance our integrity framework based on the changing landscape of money laundering risk caused by digitalisation and the new working mode alongside the enhancement of governance and collaborative works to promote the effectiveness of the new counteract measures. The B20 Integrity and Compliance Task Force recognises this challenge and puts this specific issue under the first policy action of the third policy recommendation. We need to be focused on money laundering and terrorism financing risk factors and the way we identify these. To do this effectively we need to use a risk-based approach that is relevant and specific to each industry and institutional context. Therefore we need to update the national, sectorial and institutional money laundering terrorist financing risk assessment by considering changes in society, the economy, technology and behaviour.”

Meanwhile, the FATF monitoring report for Indonesia recognises the strong AML controls operated by international accounting networks like ICAEW. Accounting sector expertise can be decisive in helping establish and instil the systems and controls needed to prevent money laundering. “In line with the acknowledgement of AML controls on the FATF monitoring report, supporting Indonesia’s decision to join FATF is important for ICAEW. We believe that with collective efforts, we can make a real difference for individual businesses in strengthening controls and reducing risk, as well as for governments in securing their economies from economic crimes,” Mark added.

As a globally renowned accounting body with anti-money laundering advocacy, ICAEW has partnered with governments and law enforcers worldwide since its inception, giving recommendations and helping decide the best course of action to combat financial crimes. Since 2021, the organisation has participated in public-private forums, such as the Economic Crime Strategic Board, the Joint Fraud Task Force, the AML Supervisors Forum, and the Accountancy AML Supervisors Group (AASG).  

At B20, ICAEW fully supports five key recommendations from the task force: (1) identifying what to pay attention to when countries update their national, sectoral, and institutional ML/TF risk assessments; (2) specifying how businesses get the support to implement and comply with ML/TF regulations effectively; (3) promoting collaborations between the public and private sectors; (4) encouraging public-private and private-private information sharing, and (5) promoting the adoption of innovative technology solutions.

The B20 Integrity and Compliance Task Force Conference: Fostering Agility to Combat Money Laundering and Economic Crimes took place on Wednesday, 28 September 2022. The half-day hybrid conference was divided into two sessions. The first session featured the first international screening of ICAEW’s latest training film titled “All Too Familiar” (ATF). ATF is a high-quality training film created by ICAEW in collaboration with HM Revenue and Customs that challenges mindsets and provokes discussions of the need for greater professional scepticism to identify the risks of economic crimes, particularly money laundering.

“At the very core of what we, chartered accountants do, is problem-solving. We are a profession of problem-solvers who find solutions, and this is one of the biggest problems the world has ever faced. And we must work together collaboratively with other professions, civil society, NGOs, and governments,” concluded Mark.