Indonesia to Pass Regulations to Control Money Laundering

Indonesia is looking to develop a strong regulatory framework to curb money laundering and terrorism financing. The new regulations will require fintech service providers to report suspicious transactions to the authorities.

The financial technology services including peer-to-peer lending, crowdfunding, and other services will have to inform the Financial Transaction Reports and Analysis Centre of any unusual transactions. This regulatory proposal is awaiting the approval of the President and it is soon expected to be implemented in the country. 

Indonesia was on the FATF’s blacklist. It took the country more than 20 years to overthrow the military dictator and reform the economy. Corruption in the country led to money laundering and terrorism financing.

Indonesia set to pass regulation to stem money laundering, terrorism financing in fintech sector https://t.co/kvid5Gla0y

— ST Foreign Desk (@STForeignDesk) February 23, 2021

Previously, regulations were passed that required all financial institutions to adopt more transparent measures. They were required to identify and report to the authorities regarding the identity of their customers in case of unusual transactions. New rules also encouraged digital development in the industry that led to innovations in payment systems. Now the regulation is focusing on the guidelines that will make fintech companies to be more compliant with the AML and CFT regulations.

P2P lenders are now obligated to report the transaction data to the agencies starting from April. This move is made to prevent the unintentional involvement of the P2P lenders and fintech service providers to be involved in the illicit financial flow. It is due to their popularity, their widespread accessibility, low regulatory requirements, and minimum service fees.