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Print articleImplementation of the Anti-Money Laundering and Terrorism Funding Prevention Program for Commercial Banks in Indonesia
October, 2009 -
The growth in money laundering activities and terrorism financing using financial institutions requires concrete action to eradicate these criminal activities. The diversity of products, activities and information technology available in the banking sector has resulted in an increase in the use of banks for money laundering and terrorism funding. In an attempt to prevent money laundering and terrorism activities, Bank Indonesia has issued Regulation Number 11/28/PBI/2009 dated 1 July 2009 on the Implementation of Anti-Money Laundering and Terrorism Funding Prevention Program for Commercial Banks (“BI Reg. 11/28/PBI/2009”).
In implementing the anti-money laundering and terrorism funding prevention program, commercial banks must comply with international standards for the prevention and eradication of money laundering and/or terrorism financing under the Financial Action Task Force on Money (FATF), known as “Recommendation 40+9 FATF” as stipulated in BI Reg. 11/28/PBI/2009. The Recommendation is used as a guideline internationally for evaluating the compliance of a country in implementing anti money laundering and terrorism financing programs.
Bank Indonesia believes that the Bank Indonesia Regulation on the Know Your Customers Principle needs to be adjusted to international standards through the inclusion of provisions on: (i) the use of Customer Due Diligence to identify, verify and monitor customers; (ii) the implementation of a Risk Based Approach; (iii) the eradication of terrorism financing; (iv) Cross Border Correspondent Banking; and (v) money transfers.
BI Reg. 11/28/PBI/2009 provides that every bank that already has Know Your Customers Guidelines must ensure that the guidelines comply with the provisions of BI Reg. 11/28/PBI/2009 within 12 months of the date of the promulgation of this regulation. Commercial banks are required to take any action required to eradicate the misuse of developments in technology for money laundering and/or terrorism activities. In addition, commercial banks must cooperate with the police and the authorized agencies in the effort to eradicate money laundering and/or terrorism financing activities.
Administrative sanctions and/or fines will be imposed on commercial banks which do not comply with BI Reg. 11/28/PBI/2009.
In implementing the anti-money laundering and terrorism funding prevention program, commercial banks must comply with international standards for the prevention and eradication of money laundering and/or terrorism financing under the Financial Action Task Force on Money (FATF), known as “Recommendation 40+9 FATF” as stipulated in BI Reg. 11/28/PBI/2009. The Recommendation is used as a guideline internationally for evaluating the compliance of a country in implementing anti money laundering and terrorism financing programs.
Bank Indonesia believes that the Bank Indonesia Regulation on the Know Your Customers Principle needs to be adjusted to international standards through the inclusion of provisions on: (i) the use of Customer Due Diligence to identify, verify and monitor customers; (ii) the implementation of a Risk Based Approach; (iii) the eradication of terrorism financing; (iv) Cross Border Correspondent Banking; and (v) money transfers.
BI Reg. 11/28/PBI/2009 provides that every bank that already has Know Your Customers Guidelines must ensure that the guidelines comply with the provisions of BI Reg. 11/28/PBI/2009 within 12 months of the date of the promulgation of this regulation. Commercial banks are required to take any action required to eradicate the misuse of developments in technology for money laundering and/or terrorism activities. In addition, commercial banks must cooperate with the police and the authorized agencies in the effort to eradicate money laundering and/or terrorism financing activities.
Administrative sanctions and/or fines will be imposed on commercial banks which do not comply with BI Reg. 11/28/PBI/2009.
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