Established business entities in Indonesia must identify the information on their beneficial owner and make it publicly accessible.
The president of Indonesia on March 1 enacted the Presidential Regulation No. 13 of 2018 on Implementation of Principles for Identifying the Beneficial Owner of Corporation in the Framework of Preventing and Combating Money Laundering and Financing of Terrorism Criminal Offence (PR No. 13 of 2018), which came into effect on 5 March 2018.
The enactment of PR No. 13 of 2018 demonstrates Indonesia’s commitment to combating money laundering and terrorist financing and is a further step taken by Indonesia to push for membership in the Financial Action Task Force (FATF or Group d’action financiere (GAFI)), an intergovernmental body established in 1989 which sets international standards of regulatory and operational measures for combating money laundering and terrorist financing crimes. The latter purpose is evident when looking at the substance of PR No. 13 of 2018 which is in line with the FATF/GAFI recommendations, particularly with respect to transparency and disclosures of beneficial ownership of legal persons or legal arrangements.
PR No. 13 of 2018 contains provisions empowering the relevant competent authorities in Indonesia to obtain and enforce adequate transparency as to the beneficial owner information of any types or forms of business entities in Indonesia. In summary, PR No. 13 of 2018 deals with the following matters.
PR No. 13 of 2018 stipulates that the beneficial owner must be the natural person(s), either Indonesian or non-Indonesian citizen, who ultimately owns and controls business entities (of any form) in Indonesia including
In identifying the beneficial owner(s), PR No. 13 of 2018 implements measures, which are, among others, based on (i) a specific shareholding percentage threshold (i.e., any natural person owning more than 25% of shares in a limited liability company or more than 25% of ownership over a business entity in Indonesia); (ii) ultimate authority and power to change the management of the business entities; or (iii) ultimate owner of the capital in the business entities.
For instance, in a limited liability company (Perseroan Terbatas – PT), the beneficial owner is a natural person who falls within the following criteria:
PR No. 13 of 2018 applies a mandatory compliance approach in requiring compliance with the principles for identifying the beneficial owner(s). Every business entity in Indonesia must determine at least one natural person as the beneficial owner. The management of the business entity or its representatives (e.g., notary) must then submit such beneficial owner information, including supporting documents and a statement letter on the truth of the beneficial owner information, to the competent authorities.
The beneficial owner information must contain, at a minimum, (i) full name; (ii) identity or passport number; (iii) birth place and date; (iv) citizenship; (v) address as stated in the identity card; (vi) overseas address where the beneficial owner is a non-Indonesian citizen; (vii) taxpayer identification number; and (viii) a description of the connection between the business entity and the beneficial owner.
Only time will tell how PR No. 13 of 2018 will be successful in preventing the money laundering and terrorist financing crimes in Indonesia.
We will provide other updates when the implementing regulations of PR No. 13 of 2018 are introduced.
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*A solicitor of Morgan Lewis Stamford LLC, a Singapore law corporation affiliated with Morgan, Lewis & Bockius LLP