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 election on a good-governance platform, corruption remains a significant issue in Indonesia, with the Corruption Eradication Commission (KPK) facing challenges to its independence and effectiveness following a 2019 law revision. While the KPK has seen a resurgence in prosecutions in recent years, the country continues to struggle with widespread corruption, particularly in the natural resources sector, which affects foreign investment and business operations. Indonesia's ranking in Transparency International's Corruption Perceptions Index has declined, highlighting ongoing issues with transparency and enforcement of anti-corruption laws.

Indonesia boasts a USD 1.2 trillion economy with a population of 276 million, characterized by a growing middle class and rich natural resources, making it an appealing destination for U.S. investors. Despite recent reforms like the 2020 Omnibus Law aimed at improving investment conditions, challenges such as bureaucratic inefficiency, legal uncertainties, and corruption persist, complicating the investment landscape. Nonetheless, Indonesia continues to attract significant foreign investment, particularly in sectors like digital technology and renewable energy.

Indonesia's investment climate has improved significantly since the elimination of the Negative Investment List in 2021 and 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, economic nationalism, and corruption, which complicate the investment landscape. Despite these obstacles, Indonesia continues to attract substantial foreign investment, particularly in sectors like digital technology and renewable energy, supported by a growing domestic market and government initiatives to enhance infrastructure.