Financial Crime Prevention Project

Overview

Since its removal from the Financial Action Task Force’s (FATF) Non-Cooperative Countries and Territories (NCCT) list, Indonesia has aggressively worked toward amending its laws and developing policies that enhance its law enforcement capabilities on the international stage.  USAID has increased its level of financial assistance to aid Indonesia towards further progress.  In February 2006, Indonesia was removed from FATF’s direct monitoring list, another milestone reached with USAID’s support.

Programs

USAID’s Financial Crime Prevention Project (FCPP) is a four-year, $7.2 million activity designed to strengthen Indonesia’s ability to combat financial crimes.  FCPP provides technical assistance to the Financial Intelligence Unit (PPATK), Supreme Audit Commission (BPK), the Attorney General’s Office, the Corruption Eradication Commission (KPK), and the Ministry of Finance-Inspector General Office.  FCPP’s work aids Indonesia’s own efforts to build a more modern legal and institutional framework to detect and prosecute corruption and financial crimes.

Through a separate agreement, USAID also supports activities that work with the Central Bank and commercial banks on Know Your Customer principles and other specialized training to enhance financial sector stability and soundness. USAID’s efforts will promote the Indonesian financial sector’s safety and soundness which will lead to increased investment, growth and job creation. 

Challenges for The Next Year

• Development of a National Money Laundering Strategy to coordinate Indonesia’s AML efforts;
• Improve audit processes & systems;
• Prosecute and convict money laundering offenses;
• Further build PPATK capacity and improve linkages with other agencies; and,
• Enhance PPATK and other agencies’ authority to increase AML/CFT enforcement.

Convictions

PPATK has referred 358 AML/CFT cases, of which 72 have been investigated, and 57 prosecuted leading to 27 convictions.  Though not charged under AML statutes, the convictions came under Corruption Statutes which carry a life sentence.

USAID Achievements & Program highlights

• February 2006:  FATF removes Indonesia from its direct monitoring list.
• January 2006:  FCPP conducts Asset Forfeiture Conference to determine how to improve Indonesia’s asset forfeiture laws and reporting system.
• November 2005:  PPATK adopts its Strategic Plan to guide its efforts for the next five years.  This Strategic Plan is developed in conjunction with FCPP.
• November 2005:  FCPP conducted its week-long training in Bali.
• August 2005: FCPP provided training on prosecutive methods to KPK prosecutors.
• July 2005: Indonesia participated in the Asia Pacific Group Annual meeting.
• July 2005: FCPP conducts AML training for the Indonesian parliament.
• June 2005: The Mutual Legal Assistance Law is forwarded to Parliament.
• April 2005: FCPP conducts its first week-long AML/CFT training in Semarang.
• February 2005: FATF removes Indonesia from the NCCT list.
• January 2005: FATF reviews Indonesia’s AML/CFT regime (supported by FCPP during preparation and all FATF meetings).
• November 2004: Indonesia signs a Mutual Legal Assistance treaty with 7 ASEAN countries.
• November 2004: The Indonesian Mutual Legal Assistance law is forwarded to the President’s office for signature (supported by USAID-funded ELIPS and FCCP).
• August 2004: FCPP is launched - a two-year $3.2 million, USAID-funded project designed to build capacity at PPATK and strengthen linkages between PPATK and other Indonesian agencies.
• 2003-2004:  Through the Financial Sector Reform Program, and the Central Bank, worked  to improve the Bank’s capacity to ensure compliance with Know-Your-Customer “KYC” principles and AML regulations.
• October 2003: PPATK is established, and with a $250,000 USAID award, computer systems installed to track Cash Transaction Reports and Suspicious Transaction Reports nationwide.
• October 2003: Indonesia avoids countermeasures from FATF; Money Laundering Law amended with passage of Law 25/2003 (with support from USAID-funded ELIPS: Economic Law, Institutional and Professional Strengthening project).
• April 2002:  Anti-Money Laundering Law 15/2002 passed.
• June 2001: Indonesia is included on the NCCT list by FATF.

Future Goals & Plans

The goal of USAID support is to provide high-caliber technical assistance, in coordination with other donors, to strengthen the AML/CFT regime in Indonesia.  USAID support includes:

• Development of a National Money Laundering Strategy.
• Technical assistance to PPATK in revising the Anti-Money Laundering Law, including expanded investigative authority for PPATK and other GOI agencies.
• Participatory training sessions involving financial institutions, financial regulators, investigators, prosecutors, and judges.
• Assistance to BPK to develop an Investigative Audit Unit to investigate corrupt and fraudulent misuse of government funds.
• Assistance to KPK to increase its investigators’ skills in conducting financial investigations.

Conclusions

Technical assistance and training provided by USAID-funded projects to the AML/CFT regime in Indonesia, in coordination with other donor support, has resulted in substantial and accelerated progress by Indonesia in the area of financial crime enforcement, anti-money laundering, combating the financing of terrorism, and anti-corruption efforts. 

The tangible result of these efforts was the removal of Indonesia from the FATF NCCT list on February 11, 2005 and from its direct monitoring list in February 2006. 

It is anticipated that ongoing close cooperation between the Governments of the United States and Indonesia will result in continued improvement in the AML/CFT regime, and will be reflected by enhanced investment, trade, and job creation in Indonesia.

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