Confiscation of proceeds, instrumentalities, and property of equivalent value as a policy objective
185. Optimising asset recovery efforts is one of the five key elements of Indonesia’s National Strategy for the Prevention and Eradication of ML/TF for the period 2020 to 2024. During the on-site, competent authorities communicated to assessors the goal of ML investigations is to “make perpetrators as poor as possible”, indicating that this policy objective to go after perpetrators’ assets has been well socialised among LEAs and prosecutors. In particular, there is a strong focus on recovering State loss from corruption activity. ML investigators further highlighted that confiscation of criminal proceeds and instrumentalities is essential for the purposes of combating predicate criminality, with ML investigations often being used as a vehicle for asset recovery when other measures are not available (see IO.7). The lack of statutory ability to confiscate assets of equivalent value outside of cases involving State loss, corruption, and tax, was identified as an issue by some LEAs.
However, the AT placed some weight on the fact that corruption is Indonesia’s highest risk predicate offence and assets of equivalent value are often confiscated in these cases. (See R.4).
186. The Pusat Pemulihan Aset or the Asset Recovery Centre (ARC) which became operational in 2014 to coordinate Indonesia’s asset recovery efforts, reflects the importance given to asset recovery in Indonesia. The ARC is located within the AGO, and since 2017, has established the following four working departments: (i) database and information exchange; (ii) seized and confiscated assets; (iii) national asset recovery; and (iv) transnational asset recovery. The ARC has 52 personnel at the head office in Jakarta and 2 564 personnel at the district offices. Since 2021, it maintains and manages a database known as the Asset Recovery Secured-data System (ARSSYS), which centralises information on seized/confiscated assets from close to 500 prosecutors’ offices at the district levels from the point in time when the asset seized by the authorities and excludes seizures by KPK. However, the maintenance of this database is related to the asset recovery efforts of the authorities rather than for the purpose of maintaining and monitoring national seizure/confiscation statistics. There are plans to elevate this body to a directorate level in the AGO, which is a welcome development, as it may lead to more focus on asset recovery in Indonesia.
187. AGO has developed written guidelines to guide the work of the ARC. Based on these guidelines, for high-risk crime, the ARC will initiate asset seizure, management and pursue confiscation and recovery. For example, when dealing with confiscated stocks and shares in significant amounts, the ARC will work with the Ministry of Finance, OJK and an appointed member of the stock exchange to decide how to manage the stocks and shares to prevent loss of value. Where the management of assets presents substantive costs, ARC seeks the permission of the Ministry of Finance to auction the item. Case studies reflect that these guidelines are being put into practice. Indonesia has collected more than IDR 1.66 trillion (EUR 1.1 million) from this process since 2017. Seized items that are not auctioned may be stored in the physical custody of the ARC or elsewhere, until they are no longer required as evidence and can be confiscated.
188. In order to encourage asset recovery work at the district level, prosecutors at the district level are required to input their asset recovery efforts, which is taken into account in their performance assessment. LEAs have experience in asset-tracing and most have established dedicated units that often work in conjunction with the ARC. In order to seize assets, the ARC communicates with authorities in the districts and provinces through mandate letters and if necessary, by visit to the location to manage seizures and confiscations.
189. However, although Indonesia collected and collated statistics from different agencies for the purpose of the evaluation, it was not demonstrated that Indonesia is maintaining and monitoring these statistics in a coordinated and comprehensive manner, as a matter of routine, to get a deeper and strategic understanding of the effectiveness of its asset recovery regime and to help support implementation of operational policies by different agencies. The types of assets seized are conflated (e.g., assets seized as evidence, and assets seized as instrumentalities) and there is lack of clarity as to the extent to which assets that that have been confiscated to the State relate to Indonesia’s risk areas. While there is a broad recognition of the importance of confiscation and asset recovery across LEAs, Indonesia has not formally developed a mature understanding of the utility of statistics at the operational level that would inform the concrete goals of each agency and help determine whether current confiscation and asset recovery efforts are proactive, optimal and effective and the challenges they face in achieving the desired outcomes.
Confiscation of proceeds from foreign and domestic predicates, and proceeds located abroad
190. PPATK is able to suspend or postpone financial transactions for up to five business days where there is suspicion of a criminal offence in order to avoid the flight of illicit assets (known as postponed transactions). This can be used as a means to preserve evidence as well as a prelude to asset confiscation. As displayed in Table 3.12 (below), PPATK has utilised this power in relation to a variety of offences and to some extent, in line with Indonesia’s risks. Although there has been an increase in the use of this power in recent years, the number of such freezing actions remains small for Indonesia’s risk and context. Since 2017, total of IDR 90 billion (EUR 6 million) has been confiscated using through this mechanism, relating mostly to offences involving fraud, embezzlement and cybercrime. Indonesia also explained that the significant increase in 2022 was due to a sharp increase in fraud cases as well as some high-level corruption cases.
Table 3.12. Freezing of financial transactions by PPATK (postponed transactions
Predicate
offences 2017 2018 2019 2020 2021 2022
(until June) Nos of postponed transactions
ML 0 0 13 0 10 0
Corruption 8 0 0 0 0 130
Narcotics 0 0 19 1 54 0
Fraud, embezzlement, cybercrime
44 25 18 87 115 379
Tax offences 0 0 0 0 0 25
Forestry and environmental crime
0 0 0 0 0 0
TF 0 18 0 11 18 3
Other crimes 0 85 26 0 23 30
Total 52 128 76 99 220 567
Total value of the frozen transactions
No information No information IDR 233 trillion (EUR 15.4 billion)
IDR 138 trillion (EUR 9.11 billion)
IDR 55 million
(EUR 3 637) IDR 851.7 billion (EUR 56.3 million) Total value of
resulting confiscations
IDR 8.7 billion
(EUR 580 000) IDR5.5 billion
(EUR 370 000) IDR 2 billion (EUR 130 000)
IDR 64 billion (EUR 4.2 million)
IDR 1.7 billion (EUR 110 000)
IDR 8.6 billion (EUR 570 000)
191. LEAs seize criminal proceeds and instrumentalities of crime during the investigation stage both to preserve evidence and/or to pursue confiscation and recover assets for restitution. At the conclusion of the case, the courts have the power to confiscate these assets. However, no separate data was provided by Indonesia to AT to show how effectively instrumentalities of crime are being confiscated in Indonesia, as data detailing the seizure and confiscation of instrumentalities is not maintained by Indonesia. Where further evidence of such property (i.e., proceeds of crime, property purchased from proceeds of crime or property belonging to the offender that can be used to recover State loss) emerges as the investigation progresses, further seizures are ordered by prosecutors or judges at a later stage. All seized property is liable to be confiscated upon conviction.
The table below (Table 3.13) shows Indonesia’s efforts at asset seizure across the offences. As mentioned in IO.7, ML investigations are often undertaken at a later stage or at the conclusion of a predicate offence investigation with a view to assist asset recovery which provides the opportunity for asset dissipation between the point in time when investigation into the crime begins and when ML investigations lead to the identification of assets related to the proceeds of crime.
Table 3.13. Seizures in Indonesia by crime type
Offence 2017 2018 2019 2020 2021 2022 (to
June) Total
Corruption and related ML (INP, KPK, AGO)
IDR 2.1 trillion (EUR 136 million)
IDR 3.2 trillion (EUR 210 million)
IDR 1.05 trillion (EUR 70 million)
IDR 927 billion (EUR 69 million)
IDR 12.68 trillion (EUR 840 million)
IDR 261 billion (EUR 17 million)
IDR 20 trillion (EUR 1.34 billion) Narcotics and
related ML (INP, BNN)
IDR 60 billion (EUR 4 million)
IDR 178.3 billion (EUR 12 million)
IDR 180.9 billion (EUR 12 million)
IDR 101 billion (EUR 6.7 million)
IDR 483 billion (EUR 32 million)
IDR 27 billion (EUR 1.8 million)
IDR 1.03 trillion (EUR 68 million) TF (INP) IDR 165.5
million (EUR 11 000
0 IDR 253
million (EUR 16 740)
0 IDR 1.25 billion
(EUR 82 460) 0 IDR 1.66 billion
(EUR 110 190) Forestry &
environmental crime, and related ML (INP and KLHK)
IDR 320 million (EUR 21 170)
IDR 10 billion (EUR 664 500)
IDR 91.6 billion (EUR 6.06 million)
IDR 282 billion (EUR 18.7 million)
IDR 22.9 billion (EUR 1.5 million)
IDR 1.15 billion (EUR 76 210)
IDR 408 billion (EUR 27 million)
Tax crimes and related ML (DG Tax)
IDR 15 billion (EUR 990 000) IDR 41 billion (EUR 2.8 million)
IDR 1.1 trillion (EUR 73.5 million)
IDR 24.5 billion (EUR 1.6 million)
IDR 1.2 trillion (EUR 78.8 million) Customs and
excise crimes and related ML (DGCE)
IDR 113.5 billion (EUR 7.5 million)
IDR 139.5 billion (EUR 9.2 million)
IDR 171.2 billion (EUR 11.3 million)
IDR 281 billion (EUR 18.6 million)
IDR 126.8 billion (EUR 8.4 million)
IDR 74.5 billion (EUR 4.9 million)
IDR 906.3 billion (EUR 60 million) Other crimes
(INP) IDR 25 billion
(EUR 1.7 million)
0 0 IDR 142 billion
(EUR 9.4 million)
IDR 359,6 billion (EUR 23.8 million)
IDR 658 billion (EUR 43.5 million)
IDR 1.12 trillion (EUR 78.3 million) Total IDR 7.3 trillion (EUR 482 million) IDR 1.8
trillion (EUR 120 million)
IDR 14.8 trillion (EUR 989 million)
IDR 1.05 trillion (EUR 70 million)
IDR 24.9 trillion (EUR 1.67 billion)
192. The ARC plays a key role in the process to recover and confiscate assets. It conducts its work at several levels to coordinate activities related to asset tracing, seizing, maintaining, confiscating and recovering. The tracing work begins with the appointment of an Asset Tracking Team consisting of asset recovery practitioners, prosecutors and other functional members of the ARC, who work together to conduct profiling and mapping of suspects and their assets using financial intelligence, other information obtained in cooperation with other relevant agencies as well as through ARC’s own investigations.
193. The ARC works in coordination across different LEAs and authorities. KPK generally handles its own asset management for their corruption investigations, but the ARC may engage KPK to obtain information on suspects and their assets. One useful source of information is KPK’s public official asset declaration database from which the ARC can obtain the wealth profile and source of income of public officials. More commonly, ARC also engages authorities such as land and motor vehicle registries for ownership information to trace the illicit wealth of criminals. Since 2017, confiscation orders have been obtained for 668 505 square metres of land, 27 houses and 6 890 vehicles. The bulk of these orders is for offences relating to corruption, narcotics, fraud, embezzlement and cybercrime, which are high ML risk in the context of Indonesia. However, the confiscation figures for KLHK are low considering the size of proceeds expected to be generated from both the predicate crimes and related ML offences, as confirmed by the KLHK authorities at the on-site.
Aside from KLHK, the significance of this does not appear to be appropriately appreciated by other authorities such as the PPATK and this prevents asset recovery for forestry and environmental crimes to treated as priority in Indonesia.
194. Confiscation of the assets is carried out by the prosecutor using criminal, civil or administrative mechanisms in accordance with the law. The ARC’s work also includes the management of seized assets through auction sales, recovery of confiscated State-owned assets through grants, exchanges or inclusion as government capital, repatriation of assets to victims, as well as asset forfeiture on the basis of asset recovery requests from foreign countries. The AT was taken through several instances of how the authorities used sophisticated methods to maintain the value of assets seized, including engaging expertise from other State authorities if needed. Seizing and managing virtual assets is an area where the ARC is seeking to develop its expertise through working with CoFTRA, especially after the experience of having lost a trail of illicit virtual assets in an investigation due to not having the expertise of maintaining a crypto wallet to seize such assets.
195. Overall, Indonesia has obtained court orders for the confiscation of substantial assets utilising a variety of mechanisms. Between 2017 and June 2022, the amount involved IDR 105.5 trillion (EUR 7 billion) in assets, which is significant. The proportion of confiscation by crime type (Table 3.14) appears to be generally in line with Indonesia’s risk profile. As expected and consistent with its risk profile, the most significant sums are in relation to corruption offences. However, for some other risk areas such as narcotics and fraud, the amounts are not in line with its risk profile.
196. While confiscation relating to tax crime is relatively small, Indonesia uses various forms of administrative methods to recover undeclared or under-declared taxes.
Between 2017 and June 2022, Indonesia has recovered a total of IDR 218 trillion (EUR 15.5 billion) in recovered taxes as well as in interest and penalties. Indonesia’s Law 7/2021 about Harmonisation of Tax Regulations is a voluntary tax compliance (VTC) scheme that applies over the period between 1st January and 30 June 2022.
The aim is to improve tax compliance and increase national revenues by providing individuals and corporate taxpayers to disclose repatriated or foreign assets or previously undisclosed funds or assets. The VTC legislation has transparency and other safeguards to prevent ML/TF risks arising from the implementation of the scheme and does not prevent law enforcement action where there is indication of criminal activity involving the funds, including ML activity.
Table 3.14. Confiscation as ordered by the court (by crime type)
Predicate
offence 2017 2018 2019 2020 2021 2022 (to June) Total
ML IDR 5.05
billion (EUR 333 870)
IDR 25.8 billion (EUR 1.7 million)
IDR 1.2 billion (EUR 76 500)
IDR 125 billion (EUR 8.3 million)
IDR 144.7 billion (EUR 9.6 million)
IDR 754 million (EUR 50 000)
IDR 301 billion (EUR 20 million) Corruption IDR 327.5
billion (EUR 21.7 million)
IDR 916 billion (EUR 60.6 million)
IDR 1.16 trillion (EUR 76.6 million)
IDR 492 billion (EUR 32.6 million)
IDR 31.2 trillion (EUR 2.07 billion)
IDR 43.3 trillion (EUR 2.9 billion)
IDR 77 trillion (EUR 5.2 billion)
Narcotics IDR 18.1
billion (EUR 1.2 million)
IDR 742 million
(EUR 49 090) IDR 7.5 billion (EUR 499 300)
IDR 11 billion (EUR 727 400)
IDR 23 billion (EUR 1.5 million)
IDR 399 million
(EUR 26 390) IDR 61.16 billion (EUR 4.05 million) Fraud,
embezzlement, cybercrimes
IDR 6.2 billion (EUR 406 000)
IDR 3.7 billion
(EUR 250 000) IDR 16.5 billion (EUR 1.1 million)
IDR 5.6 billion (EUR 370 000)
IDR 7 billion
(EUR 464 000) IDR 146 million
(EUR 9 650) IDR 39 billion (EUR 2.6 million) Forestry &
environmental crimes
0 IDR 16.8 trillion (EUR 1.1 billion)
IDR 1.3 trillion (EUR 86.2 million)
IDR 1.37 trillion (EUR 90.3 million)
IDR 1.26 trillion (EUR 83.4 million)
IDR 1.16 trillion (EUR 76.4 million)
IDR 21.9 trillion (EUR 1.5 billion)
TF IDR 164.6
million (EUR 10 900)
0 IDR 253
million (EUR 16 740)
0 IDR 1.2 billion
(EUR 82 460) 0 IDR 1.7 billion
(EUR 110 090)
Tax crimes 0 IDR 2.2 billion
(EUR 147 000) 0 0 0 0 IDR 2.2 billion
(EUR 147 000) Other crimes IDR 134.6
billion (EUR 8.9 million)
IDR 133 billion (EUR 8.8 million)
IDR 116 billion (EUR 7.7 million)
IDR 116 billion (EUR 7.7 million)
IDR 139 billion (EUR 9.2 million)
IDR 70 billion (EUR 4.7 million)
IDR 592.5 billion (EUR 39.2 million) Transnational
asset recovery7
IDR 2.8 trillion (EUR 188 million)
0 0 0 IDR 84.5 billion
(EUR 5.6 million)
IDR 762 billion (EUR 50.4 million)
IDR 3.7 trillion (EUR 244 million) Total IDR 3.3 trillion
(EUR 220 million)
IDR 17.9 trillion (EUR 1.2 billion)
IDR 2.6 trillion (EUR 172 million)
IDR 2.1 trillion (EUR 140 million)
IDR 32 trillion (EUR 2.1 billion)
IDR 45.2 trillion
(EUR 3 billion) IDR 105.5 trillion (EUR 7 billion)
7 This includes assets confiscated in Indonesia for foreign requests as well as assets confiscated abroad on Indonesia’s request.
Box 3.9. Jiwasraya (2020) - Complex asset management by ARC (See IO.7)
Jiwasraya, a State-owned enterprise, was used by HT and BT to embezzle through corruption and launder a total of IDR 16.8 trillion (EUR 1.1 billion) through the enterprise and other companies and accounts, as well as through the purchase of vehicles in the names of the offenders, third parties and other companies. Money was spent on gambling as well as on assets abroad, which was uncovered through formal and informal international cooperation.
The AGO set up an asset tracing team that was independent from the investigating team. The team obtained financial information from various Indonesia authorities (e.g., DG Tax, land and motor vehicle registry, KPK) as well as their investigative powers to obtain financial transaction information from banks to profile the suspects and to find the link between the illicit proceeds and assets. As company structures were used to layer and disguise the illicit funds, AGO also coordinated with OJK for shares information and MLHR for company information.
The assets seized included 3 companies, 21 cars, 1 motorcycle, luxury items, insurance policies, reals estate and IDR 11 billion (EUR 735 000) in cash.
In order to preserve the value of the assets, the ARC appraised the assets and auctioned off land, stocks and shares, as well as luxury vehicles. An uncompleted luxury boat was auctioned off for IDR 5.5 billion (EUR 363 800). Assets that could not be sold were kept by the ARC. The auction of stocks and shares as well as the re-structuring of Jiwasraya had to be carefully managed with the Ministry of Finance so as not to cause a fall in the value.
In order to restitute the State loss caused by the embezzlement, the ARC is considering the possibility of pursuing share assets of the offenders as well as licenses for mining operations as assets of equivalent value.
Through international cooperation mechanisms, Indonesia is also pursuing assets purchased in regional countries in the names of third parties with the proceeds of crime.
197. Indonesia employs several methods to realise confiscation orders. Cash and money in bank accounts can be forfeited relatively quickly. Other assets can be auctioned off to realise the value, but these take longer to do so. Indonesia also extensively employs legislation that allows confiscation of equivalent value for State loss in corruption and tax crimes in realising the value of assets that have been ordered for confiscation. It is to be noted that out of the total sum realised, IDR 2.4 trillion (EUR 163 million) was realised using this method for corruption offences. However, the ability to confiscate equivalent value is limited and is not available for other offences generally (see c.4.1(d)). This risks asset dissipation of proceeds of crime in view of the observation in IO.7 that ML investigations commence at a later stage. In such cases, the ability to confiscate equivalent or corresponding value becomes an extremely useful tool in relation to the recovery of assets.
198. The table below (table 3.15) reflects to the total value of assets realised over the assessment period. KLHK was not able to provide data on the value of assets realised to the State but noted difficulties with executing confiscation orders relating to forestry and environmental crime and their proceeds. Approximately half of the total amount realised relate to corruption offences. However, the Indonesian authorities were not able to provide further breakdown data on the assets realised by crime type and as such there is no evidence that asset recovery in relation to other risk areas, including forestry and environmental crime, narcotics and fraud, and their proceeds are in line with its risk. Overall, less than 10% of assets identified for confiscation have ultimately been confiscated which suggests that Indonesia should do more to ensure that the court orders that identify assets for confiscation are realised.
Table 3.15. Total value of assets realised from confiscation orders (excluding KLHK)
2017 2018 2019 2020 2021 2022 (to June) Total
Value of assets realised
IDR 877.5 billion (EUR 58.6 million)
IDR 1.3 trillion (EUR 87.7 million)
IDR 1.3 trillion (EUR 87.7 million)
IDR 819 billion (EUR 55 million)
IDR 970 billion (EUR 65 million)
IDR 2.9 trillion (EUR 192.5 million)
IDR 8.2 trillion (EUR 546 million)
199. Indonesia also confiscates assets for repatriation to victims as reflected in Table 3.16 below. As expected, most of the confiscation returned to victims relate to offences of fraud, embezzlement and cybercrime (e.g., Altea below).
Table 3.16. Repatriation of assets to the victim
2017 2018 2019 2020 2021 2022
(to June) Total Corruption asset
recovery – equivalent value
IDR 260.4 billion (EUR 17.2 million)
IDR 262.4 billion (EUR 17.4 million)
IDR 634.7 billion (EUR 42 million)
IDR 119.4 billion (EUR 7.9 million)
IDR 18.4 trillion (EUR 1.2 billion)
IDR 32 trillion (EUR 2.12 billion)
IDR 51.8 trillion (EUR 3.43 billion) Cash asset
recovery – returned to victim
IDR 4 billion (EUR 272 260)
IDR 41 billion (EUR 2.7 million)
IDR 12.8 billion (EUR 845 240)
IDR 611.6 million (EUR 40 460)
IDR 7 billion (EUR 469 150)
IDR 6.2 billion (EUR 413 400)
IDR 71.8 billion (EUR 4.75 million)