Layered Oversight of PFII Urged to Prevent Money Laundering Risks
Jakarta, CNBC Indonesia - Legal experts are urging the government and the House of Representatives (DPR) to strengthen the oversight mechanism for the Indonesian International Financial Centre (PFII) within the draft law currently being designed.
During a public hearing (RDPU) on the PFII Bill with the DPR’s Commission XI, Professor of International Law at Ganesha University of Education, Prof. Dewa Gede Sudika Mangku, stated that the PFII should be supervised by two institutional layers, namely a PFII Council and a PFII Authority.
He added that this council must itself be subject to layered oversight by existing authorities, such as Bank Indonesia (BI), the Financial Services Authority (OJK), the Deposit Insurance Corporation (LPS), the Financial Transaction Reports and Analysis Centre (PPATK), the DPR, and the Supreme Audit Agency (BPK).
“The PFII Council will be supervised in layers by existing regulators or authorities, so that it can manage and mitigate risks from the planning stage of the PFII Bill,” Dewa said during the hearing with the PFII Bill Working Committee at the DPR Commission XI meeting room on Monday (6/7/2026).
With this layered oversight, risks such as money laundering practices, overlapping authority between institutions, and other potential issues can be prevented.
“Risks such as money laundering and concealment of beneficial ownership, institutional overlap, capital flow volatility, being labelled a tax haven, legal uncertainty and low investor confidence, as well as cybercrime and data leaks can be suppressed if mitigation is carried out properly,” Dewa explained.
As is known, the draft PFII Bill has also specifically designed the institutional structure of the PFII. For instance, paragraph 2 of Article 4 states that the PFII Council consists of a chairperson and members. Paragraph 3 stipulates that the chairperson of the PFII Council will be led by the governor. Meanwhile, paragraph 4 states that the members of the PFII consist of the head of the PFII LP and the head of the PFII LPJK. The council members also include four individuals from independent backgrounds.
The following are details of the institutional arrangements contained in the PFII Bill draft:
Article 4 (PFII Institutions)
Paragraph (1) The PFII as referred to in Article 2 shall be managed by the PFII Council.
Paragraph (2) The PFII Council as referred to in paragraph (1) shall consist of:
a chairperson; and
members.
Paragraph (3) The chairperson as referred to in paragraph (2) letter a shall be the Governor.
Paragraph (4) The members as referred to in paragraph (2) letter b shall consist of:
the head of the PFII LP;
the head of the PFII LPJK; and
a maximum of 4 (four) individuals from independent elements.
Paragraph (5) The PFII Council as referred to in paragraph (1) shall be assisted by a secretariat.
Paragraph (6) The chairperson as referred to in paragraph (3) and the members from independent elements as referred to in paragraph (4) letter c shall be appointed and dismissed by the President.
Paragraph (7) The PFII Council shall be responsible to the President.
Article 6 (PFII Business Activities)
Paragraph (1) Business activities in the PFII shall consist of:
- financial sector business activities, including;
banking;
insurance;
Islamic finance;
capital markets, financial derivatives, and carbon exchanges;
pension funds;
financing;
venture capital;
financial sector technological innovation;
guarantees;
international commodity trading;
bullion;
trust fund management;
financial instrument management (special purpose vehicle);
financial holding companies;
money markets, foreign exchange markets, and their derivative transactions;
family offices;
other financial sector business activities;
- supporting business activities for the financial sector, including:
public accountants;
appraisal services;
notaries;
legal consultants;
financial consultants;
other supporting business activities for the financial sector; and
- other sector business activities.
Paragraph (2) Further provisions regarding the business activities as referred to in paragraph (1) within the PFII shall be regulated in a PFII Council Regulation.
Paragraph (3) In stipulating the PFII Council Regulation as referred to in paragraph (2), the PFII Council shall coordinate with the Government and/or relevant institutions.
Article 7 (PFII Business Actors)
Paragraph (1) Business actors conducting business activities as referred to in Article 6 paragraph (1) letter a within the PFII territory are prohibited from:
collecting funds from the public originating from outside the PFII territory within the territory of the Unitary State of the Republic of Indonesia; and/or
transacting with the domestic market, consumers, or retail customers outside the PFII.
Paragraph (2) The prohibition as referred to in paragraph (1) letter a shall be exempted for funds originating from the PFII.
Article 8 (Forms of PFII Business Actors)
In conducting business activities as referred to in Article 6, Business Actors may establish:
a business entity;
a legal business entity; and/or
a special purpose vehicle; and/or a trustee that is a special business entity established to conduct securitisation activities and/or manage trust funds.
Article 9 (PFII Council)
Paragraph (1) The PFII Council is an institution granted special authority (sui generis) as regulated in this Law.
Paragraph (2) The special nature as referred to in paragraph (1) includes the authority to grant investment licences, ease of doing business, and the provision of special facilities to parties supporting financing in the context of preparation, construction, and development activities of the PFII, as well as other authorities stipulated by the President.
Paragraph (3) Further provisions regarding the special authority as referred to in paragraph (1) and paragraph (2) shall be regulated in a PFII Council Regulation.