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Indonesia: New regulation issued to identify beneficial owners in support of EOI

29 May 2018

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On March 5 2018, Presidential Regulation No. 13 of 2018, requiring corporations to divulge information on their beneficial owners, was enacted. This Regulation concerns Indonesia's continuing efforts to prevent and eradicate money laundering and the funding of terrorism.

The enactment of this Regulation demonstrates Indonesia's commitment to: (i) Implementing the exchange of information (EOI) for tax purposes; and (ii) Complying with recommendations to have an adequate, accurate, and accessible information database of beneficial owners with regard to money laundering and terrorism funding criminal acts. These requirements were set by the Financial Action Task Force (FATF) – a multilateral organisation formed to stipulate standards and address issues on money laundering and terrorism financing. This Regulation is an addition to the list of issued regulations stipulating similar matters such as the Financial Services Authority Regulation No. 12/POJK.01/2017 concerning the programme for the implementation of anti-money laundering activities and the prevention of terrorism funding in the financial sector.

Presidential Regulation No. 13 of 2018 generally requires each corporation to identify its beneficial owner(s). The term 'corporation' herein refers to various types of business activities in Indonesia, including limited liability companies, foundations, associations, and firms. Different criteria for 'beneficial owner' apply for different types of business activities.

To illustrate, a beneficial owner of a limited liability company is defined as an individual who:

  • Owns 25% of the company's shares (as recorded in the articles of incorporation);
  • Holds 25% of the voting rights in the company (as recorded in the articles of incorporation);
  • Receives more than 25% of the total annual profit earned by the company;
  • Has the power to appoint, replace or remove directors and commissioners;
  • Has the authority or power to direct or control the company without the need for authorisation or approval from any party;
  • Receives benefits from the company; and/or
  • Is the true owner of the company's share capital.

In addition to any beneficial owner that may have been identified by the corporation, the authorised agency (which varies according to the type of business activity) is also empowered to identify other beneficial owners based on: (i) An audit conducted in accordance with the provisions of Presidential Regulation No. 13 of 2018; (ii) Information from government agencies or private entities managing data and/or information of the beneficial owner, and/or receiving a pertinent report thereof from a member of a designated profession; and/or (iii) Other information the accuracy of which can be verified.

Each corporation is required to provide information on its beneficial owner(s) to the authorised agency, which must be updated annually. The data collected will be managed by the authorised agency in the corporation administration services system, and will form a database which helps indicate the source or use of funds or property associated with a corporate vehicle. With regard to the EOI, the said data may be exchanged with requesting agencies (law enforcement and governmental agencies, or authorised authorities of other countries or jurisdictions). Moreover, Presidential Regulation No. 13 of 2018 allows the public to request and acquire information on any beneficial owner on the basis of Law No. 14 of 2008 concerning public information transparency. Despite its immediate effect, this Regulation grants a transitional period of one year for corporations that are already established or are in the process of establishment.

Karyadi
Santoso
Freddy
Karyadi
Nina
Cornelia
Santoso

Freddy Karyadi (fkaryadi@abnrlaw.com) and Nina Cornelia Santoso (nsantoso@abnrlaw.com), Jakarta
Ali Budiardjo, Nugroho, Reksodiputro, Law Offices
Tel: +62 21 250 5125
Website: www.abnrlaw.com






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