Download - AML/CTF Risk Assessment on Legal Person and Gap Analysis on Ultimate Beneficial Ownership Rigime
AML/CTF Risk Assessment on Legal Person and Gap Analysis on
Ultimate Beneficial Ownership Regime
Laode M Syarif, Ph.DCommissioner
Corruption Eradication Commission (KPK)
• 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
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
KPK Duties/
Functions
Co-ordination
(Art 7)
Supervision
(Art 8)
Prevention
(Art 13)
Monitoring
(Art 14)
Pre-
Investigation
Investigation
Prosecution
(Art 11)
What Makes KPK interested on Beneficial Owner ?
GAP between Rich & Poor:
1% control 50,3 % of the Economy
-World Bank, Indonesia’s Rising Divide, Des 2015-
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
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)
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
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
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.
•FitchRatifies country’s investment grade based on stability and transparency measures.
• S&PRecognizes transparency of Beneficial Ownership as one of several steps to improve market.
Beneficial Owner Global RequirementsGlobal Requirements
G20FATFRecommendations
G20 High Level Principles
Recommendation 24
Transparency & Beneficial Ownership of
Legal Persons
Recommendation 25
Transparency & Beneficial Ownership of
Legal Arrangements
BO Transparency
The 10 high level principles
on BO Transparency
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.
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
Risk AssessmentOn Legal Person
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
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
LIK
EL
IHO
OD
CONSEQUENCES
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
LIK
EL
IHO
OD
CONSEQUENCES
Gap Analysis on Beneficial
Ownership
Finding: Major Gaps01
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
Recommendations
Establishment of regulatory
framework and dissuasive sanctions
Creation of Centralized database infrastructureCreation 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
Lack of support from political parties/parliament
…Real Challenges…
FORTUNATELY: People are united behind KPK
…and the politicians KNOW it…
Thank You