May 30, 2024

Indonesian President Joko Widodo Warns of Money Laundering via Crypto and NFTs

Indonesian President Joko Widodo warned the Financial Transaction Reports and Analysis Centre (PPATK) to monitor the use of crypto and non-fungible tokens (NFTs) for money laundering during a speech last Wednesday at the 22nd Anniversary of the National Movement for Anti-Money Laundering and Terrorism Financing Prevention at the State Palace, Jakarta.

The president said he is aware of indications of money laundering through crypto assets amounting to $8.6 billion (139 trillion IDR) in 2021, referring to data from the 2022 Crypto Crime Report by Chainalysis,

“This amount, equivalent to Rp 139 trillion globally, is not just large – it is extremely large,” Widodo said during his address. “We must move quickly and stay ahead of them. Otherwise, we will continually fall behind,” he added.

Besides crypto and NFTs, the president – who is affectionately called “Jokowi” – also highlighted the need to monitor other potential tools for money laundering including virtual assets, marketplace activities, electronic money and AI-driven transactions.

Responding to the president’s directive, Mahendra Siregar, chairman of the Board of Commissioners of the Financial Services Authority (OJK), said that his agency would oversee these concerns when crypto regulation transitions to the OJK next year.

“In due course, as members of the Anti-Money Laundering and Terror Financing Prevention Team, we will have the authority to monitor these issues, including whether their use overlaps with services from other financial institutions,” Mahendra said on Wednesday to reporters during a press conference.

Currently, crypto assets in Indonesia are considered commodities and are regulated by the Commodity Futures Trading Regulatory Agency (Bappebti). According to Law Number 4 of 2023, the oversight of crypto assets will transition to the Financial Services Authority (OJK) in January 2025.

In terms of government support, Indonesia’s new leadership shows a clear stance on crypto. In the February 2024 elections, the newly elected president and vice president, Prabowo Subianto and Gibran Rakabuming Raka, openly expressed a strong interest in crypto.

Gibran, the son of current President Widodo, vocally emphasized that Indonesia needs blockchain and crypto experts to advance the country’s technological sector during election campaign, while Prabowo and Gibran’s National Campaign Deputy Chairman, Erwin Aksa, previously mentioned that Prabowo and Gibran will improve tax compliance supervision for crypto assets as many are not compliant in reporting taxes. The official inauguration of Prabowo and Gibran is set for October 20, 2024.

Editor’s note: Joko Widodo and Mahendra Siregar’s comments have been translated from Indonesian.

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