Indonesia, the world’s fourth-most populous nation, is also one of the largest cryptocurrency markets globally. In February 2024, it recorded IDR 30 trillion ($1.92 billion) in crypto transactions, and the number of registered crypto investors hit 19 million, according to Bappebti.
Considering crypto’s growing popularity, the Indonesian government has been taking active steps over the past few years towards crypto regulation, including adopting the FATF Travel Rule.
In 2021, Indonesia adopted international FATF standards to enhance the prevention and eradication of money laundering and terrorism financing in the crypto sector.
Then, in April 2023, the FATF assessment of the country's request for FATF membership found that Indonesia has a robust legal framework to combat money laundering and terrorist financing. However, it noted that there is a need to focus more on improving asset recovery, risk-based supervision, and implementing proportionate and dissuasive sanctions.
The report further noted that virtual asset service providers (VASPs) have taken steps to implement their obligations but are still in the early stages of implementing AML/CFT requirements.
Crypto transactions above a certain threshold on exchanges registered with Bappebti must comply with the rules requiring the obtaining and sharing of specific sender and recipient information.
Under Indonesia's APU and PPT (Anti-Money Laundering and Prevention of Terrorism Financing) programs, a crypto business must meet certain requirements, such as:- Appoint an MLRO or money laundering reporting officer- developing and implementing internal AML policies- Conduct regular risk assessments.
Moreover, a crypto business must:
- Conduct Customer Due Diligence (CDD), which involves collecting and verifying information (customer's name, address, and other personal data)
- Assess associated risks
- Conduct Simplified Due Diligence (SDD) and Enhanced Due Diligence (EDD), where applicable. In addition, crypto businesses are also required to monitor transactions, conduct sanctions screening, report suspicious activity and transactions, and keep records.
In accordance with international standards, Indonesia applies a minimum threshold of USD 1,000 (1,62,15,400 Indonesian Rupiah) for the FATF Travel Rule. However, transactions worth less than USD 1,000 are not entirely excluded, and certain information must still be collected:
For any transactions equivalent to $1000 or more than this amount, the information to be collected is:
Indonesian citizens must provide identity cards, while foreign nationals must provide passports and identity cards issued by their country of origin or a Limited Stay Permit Card (KITAS) in the case of Crypto Asset Customers (KITAP).
The recipients, on the other hand, must provide:
In its report earlier this month, the FATF noted that nearly 70% of its member jurisdictions globally have adopted the FATF Travel Rule. It said that the likes of the US, Austria, France, Germany, Singapore, Japan, and Canada have fully embraced the Crypto Travel Rule with proper checks and systems in place.
Meanwhile, Indonesia is among Mexico, Malaysia, Brazil, Colombia, and Argentina, which are working towards full adherence to the FATF recommendations.Malaysia, Brazil, Colombia, and Argentina, which are currently working towards full adherence to the FATF recommendations.
Crypto regulation in Indonesia is rapidly evolving, with authorities updating the regulatory framework to clarify rules and incorporate a sandbox approach for testing products.
As crypto adoption grows in Indonesia, these regulatory changes, including adherence to the Crypto Travel Rule, aim to manage the expanding market while maintaining compliance with international standards.
However, all stakeholders, including the government and Virtual Asset Service Providers (VASPs), must ensure that these regulations have minimal impact on end users.
The minimum transaction threshold for the FATF Travel Rule in Indonesia is USD 1,000. However, certain sender and recipient information still needs to be collected for transactions below this amount.
For transactions exceeding the USD 1,000 threshold, Indonesian citizens must provide their identity cards, while foreign nationals are required to present passports and identity cards issued by their country of origin or a Limited Stay Permit Card (KITAS) in the case of Crypto Asset Customers (KITAP).
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Veriscope, the compliance infrastructure on Shyft Network, empowers Virtual Asset Service Providers (VASPs) with the only frictionless solution for complying with the FATF Travel Rule. Enhanced by User Signing, it enables VASPs to directly request cryptographic proof from users’ non-custodial wallets, streamlining the compliance process.
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