THE ANTI-MONEY-LAUNDERING REGIME IN INDONESIAWicklief Herbert*I. OVERVIEW OF THE LEGAL AND INSTITUTIONAL FRAMEWORK OFINDONESIA IN THE CONTEXT OF IMPLEMENTATION OF THE UNITED NATIONSCONVENTION AGAINST CORRUPTION
Indonesia signed the United Nations Convention against Corruption on 18 December 2003 andratified it on 19 September 2006. The main implementing legislation includes: Law No. 31 of1999 on Eradication of the Criminal Act of Corruption, as amended; Prevention and Eradicationof the Money Laundering Criminal Act No. 8 of 2010 (MLCA); Law No. 5 of 2014 on State Civil
Apparatus (ASN); Law No. 8 of 1974 on Principles of Civil Service, as amended; Law No. 14 of2008 on Public Information Disclosure; Law No. 28 of 1999 on State Administration that is Clean
and Free from Corruption, Collusion and Nepotism; Regulation No. 54 of 2010 on Public
Procurement of Goods and Services, as amended; and Law No. 1 of 2006 concerning Mutual Legal
Assistance in Criminal Matters (MLA Law).
Institutions involved in preventing and countering corruption in Indonesia include:•••••••••••••••*Corruption Eradication Commission (KPK);
Attorney General’s Office (AGO);
Ministry of Law and Human Rights;
Ministry of Foreign Affairs;
Ministry of Finance;
Indonesian National Police;
Supreme Audit Board (BPK);
Finance and Development Supervisory Agency (BPKP);
National Ombudsman Commission;
Financial Intelligence Unit (PPATK);
Financial Service Authority (OJK);Ministry of National Development Planning (Bappenas);
Ministry of Administration and Bureaucratic Reform (AR&BR);
Civil Service Commission (KASN);
Public and Procurement Agency (LKPP) and Judicial Commission (KY).

Investigator, Directorate of Investigation, Corruption Eradication Commission (KPK), Indonesia.

- 49 -II. INFORMATION ON ANTI-MONEY-LAUNDERING REGULATORY AND
SUPERVISORY REGIMES AND DESCRIPTION OF THE RELEVANT SECTORS AND
TYPES OF PERSONS SUBJECT TO THE REGIMESLaw Number 8 of 2010 concerning Prevention and Eradication of Money Laundering (MoneyLaundering Law) establishes the tasks, authority and mechanism of work of Indonesia’s financial
intelligence unit (FIU), the reporting party, regulators / supervisory and regulatory institutions, law
enforcement agencies, and other related parties in the anti-money-laundering regime. This law
regulates:•Acts which fall into a money-laundering crime;•

Compliance monitoring and reporting procedures, including the application of the principleof recognizing service users and reporting suspicious financial transactions;•

Procedures for carrying cash and other payment instruments into or outside Indonesiancustoms areas;•The structure and authority of the FIU;

•Procedures for the temporary suspension of financial transactions;•Investigations, prosecutions and court hearings;•

Protection for whistle-blowers and witnesses;•Cooperation in the prevention and eradication of money-laundering.

The FIU, officially named Pusat Pelaporan Dan Analisis Transaksi Keuangan (PPATK), is
an independent institution established in the framework of preventing and combating the crime ofmoney-laundering (Article 1, number 2 of the Money Laundering Law) and operates under anadministrative model. In this case many play a role as an intermediary between the public or thefinancial services industry with law enforcement institutions. Its main task in accordance with
Article 39 of the Money Laundering Law is to prevent and eradicate the crime of moneylaundering.
Criminal acts regulated in Law Number 8 of 2010 concerning Prevention and Eradication of
Money Laundering (Money Laundering Law) include:•Any person who places, transfers, spends, pays, grants, entrusts, carries abroad, changes
forms, exchanges for currency or securities, or other acts of assets that are known to be orreasonably suspected to be the result of criminal acts as referred to in Article 2 paragraph(1) with the aim of disguising the origin of assets is subject to imprisonment for a maximumof 20 (twenty) years and a maximum fine of Rp.10,000,000,000.00 (ten billion rupiah)(Article 3 of the Money Laundering Law);- 50 -•Any person who conceals or disguises the origin, source, location, designation, transfer ofrights, or ownership when the actual assets are known or reasonably suspected to be theresult of a criminal act as referred to in Article 2, paragraph (1), is subject to imprisonment
for a maximum 20 (twenty) years and a maximum fine of Rp. 5,000,000,000.00 (fivebillion rupiah) (Article 4 of the Money Laundering Law);•

Every person who receives or controls the placement, transfer, payment, grant, donation,safekeeping, exchange, or use of assets known or reasonably suspected to be the result ofa criminal offence as referred to in Article 2, paragraph (1) shall be sentenced to a
maximum imprisonment of 5 (five) years and a maximum fine of Rp 1,000,000,000.00(one billion rupiah) (Article 5 of the Money Laundering Law).

Efforts to eradicate corruption and enforce the law are carried out by investigators, publicprosecutors and judges by involving the participation of the FIU and the Reporting Party. As an
individual or entity with first-hand knowledge of the crime, the Reporting Party submits a reporton Suspicious Financial Transactions (TKM) and Cash Financial Transactions (TKT) to the
PPATK for analysis. If there are indications of Money Laundering and / or other criminal acts, theanalysis report (LHA) or Examination Report (LHP) is submitted to the original criminal
investigator which includes the Police, Attorney's Office, Corruption Eradication Commission(KPK), National Narcotics Agency (National Narcotics Agency (National Narcotics Agency)
BNN), the Directorate General of Taxes, and the Directorate General of Customs and Excise.
These law enforcement agencies can also request an analysis report (LHA) from the PPATK forcriminal acts and / or return of assets being handled.
III. TYPICAL MONEY-LAUNDERING SCHEME
There are three stages to the money-laundering process,1 namely:i. Placement: efforts to place funds generated from criminal activities into the financialsystem.
ii. Layering (Transfer): separating the proceeds of crime from the source, namely criminal
acts through several stages of financial transactions to hide or disguise the origin of funds.
In this activity there is a process of transferring funds from certain accounts or locations asa result of placement to other places through a complex series of transactions designed todisguise and eliminate traces of sources of funds.
iii. Integration (Using Property): efforts to use assets that have seemed legitimate, both to beenjoyed directly or invested in various forms of material and financial wealth, are used tofinance legitimate business activities, or to refinance criminal activities. In conducting
money-laundering, the perpetrators do not consider the results to be obtained and the costs
involved, because the main purpose is to disguise or eliminate the origin of money so thatthe end result can be enjoyed or used safely.
Joni Emirzon, Bentuk Raktik Dan Modus Tindak Pidana Pencucian Uang, see https://jurnal.kpk.go.id.pdf,
Palembang, October 2017.

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The mode of crimes of money-laundering are as follows:
1. Open an account at a bank using your real identity, but the person who comes to the bankis another person who is similar to the photo in the identity and a signature similar to thatprinted on the original identity. In this case, before coming to the bank, the actor looks fora figure who is similar to the holder of the original identity and later acts as if he is theholder of the original identity. Previously the suspect had borrowed the original identity ofthe owner of the original identity for various reasons, namely for the processing of lettersin the context of the transaction, for example, for the maintenance or checking of
documents to the authorized agency.
2. Using the proceeds of crime to open a halal business such as catering, renting party tools,boutiques, restaurants or other businesses with the aim of obtaining profits that appear tocome from the results of legitimate activities.
3. Using the proceeds of crime to purchase vehicles or assets in the name of other people suchas wives, children, parents or drivers.
4. Making fictitious invoices, bills or accounts receivable as underlying transactions to place,transfer or transfer assets resulting from criminal acts.
5. Hiding the actual purpose of the transaction information in the transfer form (transfer,clearing or RTGS), for example, writing the purpose of the transaction for payment of debt
or for payment as an underlying financial transaction of assets resulting from criminal acts.
6. Borrowing other people's accounts by mastering ATMs, tokens and savings books so thatthe perpetrators of criminal acts can freely withdraw cash, transfer or spend money fromthe crime as if it were legal money.
7. Borrowing an account belonging to someone else. The ATM and account book is held by
the account holder, but when the money has entered the account, the perpetrator orders theaccount holder to transfer to the account of the offender or account designated by theoffender.
8. Writing in the account opening application as a businessman, company owner, director ofa PT, but in fact the company is only a front and there are no business activities. This effort
was carried out so that the money that was deposited into his account as if from the resultsof business activities but actually came from the results of criminal acts.
9. Borrowing or using an account of a company that has long existed but its financialtransactions are classified as passive to collect the proceeds of crime and subsequently theproceeds from criminal acts are withdrawn in significant amounts continuously ortransferred to an account designated by the criminal offender.

- 52 -10. Acting as a beneficial owner of a company which is used to accommodate assets resulting
from criminal acts and subsequently the perpetrators who control the company's operations,
including controlling corporate checks / BGs, some of which have been signed by directors
and commissioners who have close relationships (wife / relatives / friends), and then theperpetrator freely withdraws cash using the check / BG.
IV. EXAMPLE OF A MONEY-LAUNDERING CRIMINAL CASE
This money-laundering case involved Nazaruddin, a member of parliament. Nazaruddin wasconvicted of committing a criminal act of corruption in the construction of the Hambalang Athlete
House. Nazaruddin was charged with receiving Rp40.3 billion from PT Duta Graha Indah (DGI)
and PT Nindya Karya and also charged with receiving bribes from PT Waskita Karya in the amountof Rp 13,250,023,000, from PT Adhi Karya in the amount of Rp 3,762,000,000, and from PT
Pandu Persada Konsultan amounting to Rp 1,701,276,000. Nazaruddin then hid the proceeds ofthe crime through 42 accounts which were then transferred to ownership of the shares of Permai
Group companies, ownership of land and buildings, spending or paying for the purchase of landand buildings, spending for vehicles, paying insurance policies, and paying for the purchase ofshares and sukuk bonds.
V. ACTS OF INVESTIGATORS IN CARRYING OUT CRIMINAL INVESTIGATIONS
OF MONEY-LAUNDERING
In carrying out investigations of money-laundering crimes, investigators carry out thefollowing actions:
1. Tracing the suspect’s family history, both direct lineage and marriage;
2. Tracing the nearest circle of suspects who are suspected of being where the assets arehidden;
3. Immediately block a bank account or non-bank financial institution related to a suspect orrelated party suspected of having a relationship with the money-laundering conducted by
the suspect;
4. Ask for help from the FIU to trace financial transactions by the suspect, the company or
related parties to facilitate the work of investigators;
5. Perform calculations of how much profit or benefit the suspect has received from theoriginal crimes;
6. Browse profiles of suspects and their companies;
7. Carry out compulsory measures against suspects or related persons.

- 53 -VI. CHALLENGES OF INVESTIGATORS IN DEALING WITH MONEYLAUNDERING CRIMESIn carrying out investigations of money-laundering crimes, it is often found that someinvestigators are less professional in carrying out investigations. This is caused by, among others:
1. Lack of competence and integrity;
2. Lack of understanding of financial products;
3. Lack of understanding of how money-laundering takes place in all financial services
sectors;
4. Insufficient study of the cases that occur;
5. Failure to review the existing weaknesses in regulations, financial institutions and existingregulations;
6. Failure to plan measures for the prevention of customs and excise crimes;
7. Lack of cooperation and coordination with various agencies;
8. Not acting independently, objectively and professionally.

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