Money laundering is the process of disguising the origins of money or property obtained from crime so that it appears to have been derived from lawful activity.
Three Classic Stages
Placement introduces illicit cash into the financial system, for example through deposits or purchases of assets. Layering separates the proceeds from their source through complex chains of transactions, transfers and corporate vehicles. Integration returns the laundered funds to the economy as apparently legitimate wealth.
International Standards
The Financial Action Task Force (FATF) sets international standards, known as the FATF Recommendations, requiring states to criminalise laundering, confiscate criminal proceeds, and impose customer due diligence, record-keeping and suspicious transaction reporting obligations on financial institutions and designated professions. Indonesia became a full member of the FATF in 2023.
In Indonesian Law
Law No. 8 of 2010 on the Prevention and Eradication of Money Laundering criminalises active laundering by the perpetrator (Article 3), concealment of the origin of assets (Article 4), and passive receipt of assets known or reasonably suspected to be proceeds of crime (Article 5). Predicate offences include corruption, bribery, narcotics, smuggling, fraud, tax crimes and many others. The Financial Transaction Reports and Analysis Centre (PPATK) receives and analyses reports from reporting parties.
Reversal of Proof
In trials for money laundering, Article 77 of the law requires the defendant to prove that the assets are not proceeds of crime, a provision justified by the difficulty of tracing illicit funds.