In an effort to strengthen transparency and combat financial crimes, the Indonesian Ministry of Law and Human Rights (Kementerian Hukum dan HAM or Kemenkumham) issued a new regulation—Permenkumham No. 2 of 2025. This regulation mandates updated procedures for Beneficial Ownership (BO) reporting. The new rules build on the government’s ongoing commitment to align with international standards in anti-money laundering (AML) and counter-terrorism financing (CTF).
This article explores the key points of Permenkumham No. 2/2025, its implications for businesses, reporting obligations, and the importance of compliance. We’ll also guide you through the steps companies need to take to remain compliant under the new regulatory framework.
What is Beneficial Ownership?
Definition of Beneficial Ownership
Beneficial Ownership refers to the individuals who ultimately own or control a legal entity, even if their names do not appear on formal documentation. These individuals benefit from the assets or activities of a company and can exercise significant influence over its decisions.
Under Indonesian regulations, a Beneficial Owner is defined based on several criteria, including:
- Owning at least 25% of the shares.
- Having the authority to appoint or dismiss directors or commissioners.
- Possessing control over the entity through agreements or other means.
Why Beneficial Ownership Transparency Matters
Transparency in BO is essential to prevent misuse of legal entities for illicit purposes such as money laundering, corruption, and tax evasion. By requiring companies to disclose their BO, the government enhances trust in the corporate sector and ensures a more secure investment climate.
Overview of Permenkumham No. 2/2025
Background of the Regulation
Permenkumham No. 2/2025 replaces the earlier Permenkumham No. 15/2019. The update aligns national law with recent FATF (Financial Action Task Force) recommendations and regional best practices. The regulation was officially enacted on January 15, 2025, and took effect immediately.
Key Changes Introduced
- Expanded Scope: Now includes not just corporations, but also foundations, associations, and limited partnerships.
- Stricter Reporting Timelines: BO data must be submitted within 30 days of any changes.
- Enhanced Verification: Companies must perform due diligence to ensure the accuracy of reported BO data.
- Mandatory Annual Updates: Entities must confirm or update their BO information every year.
- Sanctions for Non-Compliance: Fines and administrative sanctions apply for late or inaccurate reporting.
Who is Affected?
Entities Required to Report
The regulation applies to the following types of entities:
- Limited liability companies (PT)
- Foreign investment companies (PMA)
- Foundations and associations
- Limited partnerships (CV)
Responsibilities of Companies
Companies are now required to:
- Identify and document their Beneficial Owners.
- Submit the information to the Ministry of Law and Human Rights.
- Update the information promptly in case of changes.
- Conduct internal reviews and ensure accurate record-keeping.
Reporting Procedures
Step-by-Step Process
- Identification: Determine individuals who meet BO criteria.
- Documentation: Gather required documents such as ID, ownership agreements, and shareholding structures.
- Submission: Report the information through the Ministry’s online portal.
- Verification: Validate submitted information through internal and external due diligence.
- Annual Confirmation: Submit a yearly confirmation of BO data, even if no changes occur.
Digital Reporting Platform
Reporting must be done via the “AHU Online” system, which has been updated to accommodate the new BO reporting features. It provides real-time submission, review, and monitoring functionalities.
Compliance Risks and Penalties
Potential Risks
Non-compliance with Permenkumham No. 2/2025 may result in:
- Financial penalties.
- Suspension of company operations.
- Inability to access government services or permits.
Legal Sanctions
Firms that fail to submit or falsify BO data may face:
- Administrative sanctions from Kemenkumham.
- Blacklisting from public tenders.
- Legal prosecution under anti-money laundering laws.
Strategic Importance of Compliance
For Businesses
Staying compliant enhances corporate governance and investor confidence. It signals a company’s commitment to ethical practices and legal responsibility.
For Investors and Stakeholders
Clear BO records reduce risk and improve transparency, attracting more responsible investment and enabling better due diligence.
Conclusion
Permenkumham No. 2/2025 represents a significant step forward in Indonesia’s push for greater corporate transparency. The regulation not only tightens the rules around BO reporting but also brings local practices in line with global standards. For companies operating in Indonesia, understanding and complying with this regulation is essential to avoid legal pitfalls and to build long-term credibility.
Ensuring compliance should be seen not just as a legal requirement but as a strategic advantage in an increasingly regulated global market. Companies are encouraged to act swiftly, set up internal systems for compliance, and consult with legal professionals if needed.
CPT Corporate provides expert assistance in company registration and legal compliance in Indonesia. With a deep understanding of local regulations—including BO reporting under Permenkumham No. 2/2025—we help businesses navigate the legal landscape smoothly and efficiently. Whether you are a local entrepreneur or a foreign investor, CPT Corporate is your trusted partner in establishing and managing your business in Indonesia.
