Indonesia: Enforcement of Minister of Law and Human Rights Regulation No. 2 of 2025 on the Verification and Supervision of the Beneficial Owner of a Legal Entity
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Enforcement of Minister of Law and Human Rights Regulation No. 2 of 2025 on the Verification and Supervision of the Beneficial Owner of a Legal Entity
April 2025
One Asia Lawyers Indonesia Office
Koji Umai, Lawyer (Japan)
Prisilia Sitompul, Lawyer (Indonesia)
1. Introduction
The Minister of Law has issued Regulation No. 2 of 2025 on the Verification and Supervision of Beneficial Owners of Corporations (“MoLR 2/2025”), thereby expanding the responsibilities of legal entities in applying the Know-Your-Beneficial-Owner (“KYBO”) Principle.
Compared to the previous Minister of Law and Human Rights Regulation No. 21 of 2019 on Procedures for Supervising the Implementation of the KYBO Principle (“MLHR 21/2019”), this new regulation provides clearer stipulations regarding the obligations of legal entities.
2. Who is a Beneficial Owner (“BO”)
Article 1 paragraph (2) of MoLR 2/2025 defines a “Beneficial Owner” as an individual who has the authority to appoint or dismiss the board of directors, board of commissioners, managers, leaders, or supervisors of a company, has the ability to control the company, is entitled to receive benefits from the company either directly or indirectly, holds ultimate control over the company’s funds; and/or meets the criteria stipulated under the provisions of laws and regulations.
3. New Obligations for Legal Entities
As previously stipulated under MoLHR 21/2019, legal entities are required to identify their BO. In addition to this, MoLR 2/2025 introduces new obligations aimed at ensuring compliance with the KYBO principle, as outlined below.
a. Obligation to Implement the KYBO Principle (Article 3 paragraph (1)):
- Annual update of BO information;
- Management and maintenance of documentation related to BO;
- Responding to inquiries related to the BO.
b. Implementation of KYBO Procedures (Article 4 paragraph (1)):
Corporations are required to:
- Identification and verification of the BO;
- Determination of who qualifies as the BO;
- Submission of the BO information to the Minister of Law and Human Rights.
4. Who Is Responsible for Conducting BO Verification?
Under MoLR 2/2025, BO verification must be conducted based on specific risk assessments, including those related to money laundering and terrorism financing (Article 5). The responsibility for this verification lies with the following parties:
- Legal Entity (Article 6)
- The legal entity must verify the attached documents and ensure the accuracy of the BO information, particularly when reporting the establishment, changes, or annual updates of the legal entity.
- Notary (Article 7)
When a legal entity utilizes notarial services, the notary is also involved in the BO verification process to facilitate corporate actions. - Minister of Law and Human Rights (Article 8)
The Ministry of Law and Human Rights verifies the BO information submitted by the legal entity and/or notary by reviewing the BO questionnaire completed by the completed by the legal entity. - Other Government Agencies (Article 9)
Other institutions may also carry out BO verification in accordance with their respective legal obligations and regulatory authority.
5. Expansion of the Requirement to Complete the BO Questionnaire
Under MoLHR 21/2019, completing the BO questionnaire was an obligation imposed on legal entities. MoLR 2/2025 expands this requirement to also apply to notaries (Article 10, paragraph 1).
The regulation further stipulates that the BO questionnaire must be completed in the following situations (Article 10 paragraph 3)
- When establishing, registering, or obtaining approval for a legal entity;
- When making changes to the Corporation’s articles of association of a legal entity;
- When updating the data of a legal entity; and/or
- When reporting, changing, or updating information regarding the BO of a legal entity.
6. Supervision of BO Information Submission
MoLR 2/2025 sets out a simplified framework for the supervision of legal entities in applying the KYBO principle. This includes the submission, modification, and updates of BO information by legal entities. Such supervision may be conducted either electronically or non-electronically, depending on the method of KYBO principle (Article 18 to 21).
7. Administrative Sanctions for Non-Compliance
Under MoLR 2/2025, if a legal entity fails to fulfill its obligation to report or update information regarding its BO, the Minister may impose administrative sanctions. These sanctions apply to the following types of legal entities (Article 22 paragraph 1 and 2):
- Legal entities that fail to report their BO;
- Legal entities that provide false information.
The administrative sanctions may include (Article 22 paragraph 3):
- A written warning;
- Inclusion of the corporation’s name on the Ministry of Law and Human Rights blacklist;
- Suspension of access to the Ministry’s online legal administration system (AHU Online).
The sanctions will only be lifted if the legal entity properly submits complete and accurate BO information that has been verified by the relevant authority. (Article 25)
8. Conclusion
As outlined above, MoLR 2/2025 aims to enhance transparency regarding the BO of legal entities by setting out more details for legal entities and providing administrative sanctions. As a result, for Japanese-affiliated companies operating in Indonesia, the reporting of Beneficial Owners is expected to become an increasingly important aspect of corporate governance, requiring more accurate and appropriate compliance than ever before.
