Presentasi ini disampaikan dalam Global Conference on Beneficial Ownership Transparency, 23-24 October 2017

1. AML/CTF Risk Assessment on
Legal Person and Gap Analysis on
Ultimate Beneficial Ownership Regime
Laode M Syarif, Ph.D
Commissioner
Corruption Eradication Commission (KPK)

2. • Established in December 29th, 2003
• Independent from the Executive,
Legislative, Judiciary and other powers
(Auxiliary Body)
• Responsible to the Public
• Financially, KPK is audited by the
Indonesian Supreme Audit Board
• Lead by 5 commissioners (Collective
Collegial)
• +/- 1500 officers
• 250 investigators-prosecutors only
KPK in a Nutshell

3. KPK’s Strategic Plan 2015-2019
Focus on strategic sector
and national interest:
1) Law enforcement
2) Bureaucratic Reform
3) Energy & Natural Resources (energy, oil & gas,
mining, forestry)
4) Food Sovereignty (plantation, fishery, agriculture)
5) Education & Health
6) State income (tax, customs, non-tax revenue)
7) Major Infrastructure

4. KPK
Duties/
Functions
Co-ordination
(Art 7)
Supervision
(Art 8)
Prevention
(Art 13)
Monitoring
(Art 14)
Pre-
Investigation
Investigation
Prosecution
(Art 11)

5. What Makes KPK interested on Beneficial Owner ?

6. GAP between
Rich & Poor:
1% control
50,3 % of the
Economy 
-World Bank, Indonesia’s
Rising Divide, Des 2015-

7. Web of the Chief Justice Corruption
► He received bribes from:
Parliamentarian, Governor,
mayors/head of District
candidates, lawyers, political
parties.
► He established several
companies to laundered his
bribes.
► Some of them used the name of
his Driver, etc
► KPK send him to jail for life and
confiscated his ‘known’ assets

8. M. Nazarudin Case
► He was a treasury of Political Party
► He established at least 38 companies to
laundered his corruption.
► We haven’t finish in investigating his cases.
► He is now in Jail for 7 years, but he will face
another trial for his remaining cases.
► KPK has confiscated his known assets
(factory-plantation-buildings-land, etc)

9. e-KTP Case
► Created more than USD 200 Million
State Lost.
► Involving “High Ranking Official”
(Speaker + Members of Parliament,
Minister, Private Sectors)
► Involving multi jurisdictions (Indonesia-
Singapore-USA-India-Mauritius, etc)
► We have sent TWO persons to Jail,
but the REAL Master Mind still ‘free’
► The “REAL Test” of KPK Existence 

10. Mining and KPK Study
► 4,276 licenses (40 % ) of 10,432 Mining Licenses
(IUP) are NOT Clear and Clean (Non CnC)
► 1.850 (24%) of IUP have No TAX FILE NUMBER
► Some IUP are INSIDE Conservation Areas (1.37
Million Ha) and INSIDE Protected Forest (4.93
Million Ha)
► 90% of IUP are not paying Rehabilitation + Post
Mining Fund
► Various Mining Companies OWE the State around
IDR 23 T (USD 1.8 Billion).
► We DON’T KNOW the REAL Owner of these
Companies

11. Transparency in Industries
91%
of business leaders believe
it is important to know the
Beneficial Ownership of the
entities with which they do
business
- EY’s 14th Global Fraud
Survey 2016 -
The “Big Three” Credit Rating Agencies
(Standard & Poor’s, Moody’s, and Fitch) use
transparency as a marker in the rating
methodologies.
•Fitch
Ratifies country’s investment grade based on
stability and transparency measures.
• S&P
Recognizes transparency of Beneficial
Ownership as one of several steps to improve
market.

12. Beneficial Owner Global Requirements
Global
Requirements
G20
FATF
Recommendations
G20 High Level
Principles
Recommendation 24
Transparency & Beneficial Ownership of
Legal Persons
Recommendation 25
Transparency & Beneficial Ownership of
Legal Arrangements
BOTransparency
The 10 high level principles
on BO Transparency

13. Indonesia Actions to Implement the G20 High Level Principles
1. Indonesia National Risk Assessment of money laundering and terrorist financing is close to
completion.
2. Currently, undertaking study on beneficial ownership legislation in Indonesia.
3. Legislation:
Work towards a comprehensive legislation on beneficial ownership that includes the following:
a. Definition of beneficial owners;
b. Beneficial ownership information management (i.e. company registry);
c. Accessibility of beneficial ownership information;
d. Liabilities: penalties for providing false information;
4. Compliance
Enhance the implementation of Customer Due Diligence Measures, as well as Know-Your-Customer
principle for every financial transaction done through financial institutions, non-financial institutions.
5. Data collection and information sharing Work towards an efficient and centralized data collection:
(LEA-FIU-Financial Institution).
6. International cooperation
Enhance & strengthen international cooperation in beneficial ownership information.

14. Reference Countries
Italy
Spain
United Kingdom
Singapore
Civil Law
Countries
Common Law
Countries
Largely
Comply
FATF Rec
24 &25
Best System
(Transparency
International)
Partially Comply
FATF Rec 24 &25

15. Risk Assessment
On Legal Person

16. ML/TF detection for legal persons may require enhancement
►STRs on legal person accounts for 3% of the total STR population, while customers from
the business sector transacts more in terms of value and complexity.
►Detection scenarios used to detect suspicious activities by legal person are not as
productive as those used on natural person customers.
►The low STR rate for legal persons may contribute to the low rate of money laundering
investigations in legal person.
►LEAs perceive that in 50% of ML cases involve legal person as vehicle. However, the
number of STRs for legal person only comprises of 3% of total STRs population.
STR Population by Customers
Background

17. Types and risk of corporations in Indonesia on Money Laundering
[CELLRANGE], 64.2
[CELLRANGE], 6.6
[CELLRANGE], 4.3
[CELLRANGE], 5.0
[CELLRANGE], 14.4
[CELLRANGE], 5.2
[CELLRANGE], 6.1
[CELLRANGE], 4.2
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
- 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
LIKELIHOOD
CONSEQUENCES

18. AML | Types of Business
[CELLRANGE], 16.4
[CELLRANGE], 3.6
[CELLRANGE], 1.6
[CELLRANGE], 8.9
[CELLRANGE], 5.7
[CELLRANGE], 1.7
[CELLRANGE], 20.3
[CELLRANGE], 3.4
[CELLRANGE], 8.8
[CELLRANGE], 3.3
[CELLRANGE], 14.2[CELLRANGE], 14.4
[CELLRANGE], 20.9
[CELLRANGE], 29.9
[CELLRANGE], 2.6
[CELLRANGE], 13.2
[CELLRANGE], 8.0
[CELLRANGE], 5.0
[CELLRANGE], 1.4
[CELLRANGE], 16.8
[CELLRANGE], 10.6
[CELLRANGE], 4.5
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
- 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
LIKELIHOOD
CONSEQUENCES

19. Gap Analysis on
Beneficial
Ownership

20. Finding: Major Gaps
01
BO Framework
(establishment,
definition,
mechanism, record,
periodic update)
02
Appointment of
designated party to
cooperate with
authorities and
onshoring of
information
03
“Single door”
registration system
for all types of
corporation
04
Timely access of
basic and BO
information for
authorities
05
Proportionate and
dissuasive sanctions
06
Document
retention and
service level
agreement
07
Targeted & Random
sampling by
independent party to
ensure basic and BO
accuracy
08
Definition, type, and
scope of legal
arrangements
We DO HOPE the PRESIDENT will be willing to issue PRESIDENTIAL REGULATION to AMEND these Gaps

21. Recommendations
Establishment of
regulatory
framework and
dissuasive sanctions
Creation of
Centralized
database
infrastructure
Creation of access
and distribution of
BO informaton
• Improvement on asset
tracing
• Improvement on tax
compliance
• Improvement on
money laundering
prevention
• Better governance and
transparency
Information
Collection
ACCESS PROVISION
ENTITY
REGISTRATION
DATABASE
ENTITY
ESTABLISHMENT
RECORD KEEPING

22. Lack of support from political
parties/parliament
…Real Challenges…

23. FORTUNATELY: People are united behind KPK
…and the politicians KNOW it…

24. Thank You