Jakarta (Indonesia), 24 August 2023 – The Indonesian Ministry of Law and Human Rights (MLHR), in seeking to improve its Beneficial Ownership (BO) verification system, requested guidance from UNODC on international best practices and sought key insights from jurisdictions that have adopted auto-verification systems. This initiative by the MLHR is in-line with the targets set by the National Strategy on Corruption Prevention (Stranas PK) to improve data quality and verification in certain high-risk sectors. While several agencies are collecting BO data, including the MLHR, none of these agencies to date are verifying the BO data collected.
In response to the MLHR’s request, UNODC and Open Ownership co-hosted a two-day in-person workshop on developing BO data verification systems in collaboration with the MLHR, and the Secretariat of the National Strategy of Corruption Prevention, in Jakarta on 23-24 August 2023. This workshop gathered a total of 31 participants (16 of whom were women), from the Indonesian Government including: the Directorate General of Tax, Financial Service Authority, Ministry of Energy and Mineral Resources, and the Indonesia Investment Coordinating Board.
The goal of the workshop was to assist all invited agencies in addressing current challenges regarding verification of BO data, and to help the MLHR build on these learnings to design and implement an effective verification system. In his opening remarks, the Director General of the MLHR, Mr. Cahyo Muhzar, emphasized the importance of BO transparency as part of attracting investment in Indonesia. Mr. Muhzar further highlighted how progress has already been made in improving the effectiveness of BO disclosure systems in Indonesia and that the MLHR is scrutinizing all BO data to ensure that companies dutifully report natural and legal persons as beneficial owners under the law.
Throughout the workshop, UNODC highlighted the importance of determining, collecting, and making information on the BO of businesses available as a safeguard against the co-mingling of illicit financial flows or proceeds of crime. The workshop additionally highlighted how criminal exploitation of the legitimate financial system and corporate structures also has significant impact on a financial system, society, and economy as a whole.
Open Ownership shared presentations on concepts, theories and best international practices on beneficial ownership and verification. The organization’s Executive Director, Mr. Thom Townsend, reiterated the importance of BO transparency and collecting high-quality structured data in fostering a healthy and transparent business environment. Participants were then invited to apply their knowledge through group activities on the learnings through plenary sessions, where they reflected on the feasible data owned by each of the agencies to connect and validate or verify data submitted by the company.
Following the workshop, the participants developed an Outcome Document that produced 10 recommendations on beneficial ownership in Indonesia, including requiring newly established companies to disclose their beneficial owner(s) as part of their registration, allowing automated conformance checks and cross-checking with other ministries that collect relevant supporting information, and ensuring MLHR can access the Immigration Department’s data to verify foreign passports, among others. The Outcome Document can be accessed in full here.
This activity was funded by the U.S. Department of State Bureau of International Narcotics and Law Enforcement Affairs (INL).
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