FATF Status

Indonesia was removed from the FATF List of Countries that have been identified as having strategic AML deficiencies on 26 June 2015.

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Indonesia was undertaken in 2023. According to that Evaluation, Indonesia was deemed Compliant for 6 and Largely Compliant for 29 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 4 of the Effectiveness & Technical Compliance ratings.

Despite President Jokowi's commitment to good governance, corruption remains a significant issue in Indonesia, with a decline in the independence of the Corruption Eradication Commission (KPK) following the 2019 law revisions. Although there was a notable increase in prosecutions in 2022 and 2023, the overall environment for combating corruption is hindered by political interference and a lack of compliance with international anti-corruption conventions. Indonesia's ranking in Transparency International's Corruption Perceptions Index has worsened, reflecting ongoing challenges in transparency and accountability, particularly in sectors like natural resources.

Indonesia boasts a USD 1.2 trillion economy supported by a population of 276 million and a growing middle class, making it an appealing destination for U.S. investors. Despite its abundant natural resources and stable economic growth, challenges such as restrictive regulations, legal uncertainties, and corruption persist, complicating the investment climate. Recent reforms, including the 2023 Omnibus Law on Job Creation, aim to enhance competitiveness and attract foreign investment by streamlining regulations and lowering corporate taxes.

Indonesia's investment climate has improved significantly, particularly following the ratification of the 2023 Omnibus Law on Job Creation, which aims to enhance competitiveness by reducing corporate taxes and regulatory barriers. However, foreign investors still face challenges such as legal uncertainties, bureaucratic inefficiencies, and corruption, which complicate the investment landscape. Despite these obstacles, Indonesia continues to attract substantial foreign investment, particularly in sectors like infrastructure, digital technology, and green investment.