“Becoming a FATF member is our main target next year,” Kiagus Ahmad Badaruddin, PPATK chairman, told The Jakarta Post on Tuesday. “We want to contribute to the international community's efforts to detect and eradicate cross-border cases of money laundering and terrorist financing.”

Established in 1989, the FATF is an intergovernmental organization comprising 39 members that focuses on establishing international legal, regulatory and operational standards to combat money laundering, which often occurs across borders. As a policymaking body, the FATF requires its members and affiliated organizations to adopt its regulations in order to protect the integrity of the international financial system.

Indonesia is the only G20 member that is not a full member of the FATF, although it was granted observer status in 2018. Indonesia is a member of the Asia/Pacific Group on Money Laundering (APG), one of nine organizations affiliated with the FATF.

However, Kiagus added, observer status was not enough, as the country sought greater involvement in the FATF, especially in arranging international measures to combat money laundering.

He argued that all cross-border financial activities originating from Indonesia, a country with a gross domestic product (GDP) of more than US$1 trillion, would have a considerable impact on the international financial system, meaning the country could play an important role in helping the FATF set policies and regulations.

FATF membership has given a big boost to countries’ efforts to combat money laundering.

A 2017 report by Transparency International stated that Kenya, a member of FATF-affiliated Eastern and Southern Africa Anti-Money Laundering Group, has implemented FATF regulations since 2012 and reported 345 suspicious financial transactions within two years after the policies were enacted. Meanwhile, Bangladesh, also a member of the APG, has complied with 40 FATF recommendations since 2016, helping the country bring 214 money laundering cases to court.

“As a large economy, Indonesia certainly needs to have a say in the organization,” Kiagus said.

Indonesia, he added, would reap many benefits from full membership, stressing that if potential investors saw that Indonesia was committed to stamping out embezzlement and the flow of illegally sourced funds, it would increase trust and attract investment.

“Beyond the economic benefits, becoming a member of FATF will also improve our integrity as a nation, as the FATF comprises many developed countries,” Kiagus maintained.

PPATK deputy chairman Dian Ediana Rae said the agency had been pushing for full FATF membership since 2017 after the organization named Indonesia as one of the countries that were “in the pipeline” for membership alongside Israel, Saudi Arabia and Nigeria.

However, he explained that the PPATK still needed to meet a number of requirements before being admitted to the FATF.

He said the FATF had previously asked for a joint formal commitment from 11 state officials stipulating that antimoney laundering policies in Indonesia complied with 40 of FATF's recommendations.

At the same time, the FATF conducted an evaluation in November 2019 to assess whether these policies had been effective in eradicating money laundering and terrorist financing in Indonesia.

“Representatives from the FATF will visit Indonesia in March, with the results of the evaluation to be presented during an FATF plenary meeting in October. We just hope the results will be good enough for us to become a full member of the FATF,” Dian added.

He explained that if the meeting in October gave a satisfactory rating, then the organization would ask Indonesia to conduct a follow-up improvement that PPATK expected to complete by 2021. Indonesia would obtain full membership of the FATF if the plenary meeting attended by all members next year accepted the proposal.

Yenti Garnasih, an antimoney laundering legal expert from Trisakti University, said Indonesia would obtain many benefits from full membership in the organization, as it would be easier to ask countries to arrange government-to-government agreements to trace and detect illicit cross-border financial flows.

Such agreements, she said, would help the country recover its losses from cases such as the graft scandal pertaining to the procurement of electronic identification cards (e-KTP). The large-scale corruption case caused
Rp 2.3 trillion (US$164.28 million) in state losses — some of which the Corruption Eradication Commission (KPK) believed had been transferred overseas.

Yenti also believed that FATF membership would help Indonesia build trust with foreign investors.

“I believe that foreign investors will have more confidence investing in Indonesia’s capital market or financial services as financial flows in the sector will be heavily supervised by the PPATK and its fellow financial intelligence units,” she said. (glh)

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