Jakarta. Legal protections surrounding the issuance of Patriot Bonds and Merah Putih Bonds could undermine Indonesia’s anti-money laundering regime and potentially put its membership in the Financial Action Task Force (FATF) at risk, constitutional law professor Mohammad Mahfud MD has warned.

Law No. 4 of 2026 on the development and strengthening of the financial sector contains provisions governing the issuance of special debt instruments, including Patriot Bonds and Merah Putih Bonds.

One provision grants legal protection to purchases of the bonds from general criminal prosecution, tax-related criminal proceedings, and civil lawsuits.

The law also stipulates that data and information related to bond-purchase transactions cannot be used as a basis for tax assessments or as legal evidence in court.

Mahfud, a professor of constitutional law at the Islamic University of Indonesia (UII), said the provisions could undermine international confidence in Indonesia’s commitment to combating money laundering and jeopardize the country’s position in the FATF.

Indonesia secured FATF membership after years of efforts to strengthen its systems for combating corruption and money laundering, he said.

“We worked very hard to get into the FATF, and now we are making a ridiculous law simply because [the government] may need money for the next few years, while what is being damaged is a system that took a long time to build,” Mahfud said during a public lecture in Jakarta on Saturday.

Mahfud, a former coordinating minister for political, legal, and security affairs, argued that short-term financing needs should not come at the expense of a legal and anti-money laundering framework developed over many years.

Indonesia officially joined the FATF in 2023 as its 40th member. The FATF is the global standard-setting body for combating money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction.

Mahfud said the controversial provisions warrant particular scrutiny because they could make it more difficult for authorities to trace the origins of funds suspected of being proceeds of crime.

“If the source of the money cannot be traced, that is a form of money laundering,” he said.

The provisions have previously been challenged before the Constitutional Court, with petitioners questioning the protections against criminal prosecution and civil lawsuits. They argued that such protections could create moral hazard and potentially be exploited by perpetrators of financial crimes seeking to shield assets derived from illegal activities.

Indonesia has so far made progress in strengthening its compliance with FATF standards. In a follow-up report published on June 3, 2026, the FATF found that Indonesia had made progress in addressing deficiencies in its technical compliance.

Of the FATF’s 40 recommendations, Indonesia was rated compliant with seven, largely compliant with 30, and partially compliant with the remaining three.

Mahfud said those gains should be protected from being eroded by domestic policies. He argued that a more serious problem arises when political interests and short-term needs go beyond encouraging individual acts of corruption and begin weakening established legal institutions and safeguards.

During his speech, Mahfud repeatedly invoked the maxim “power tends to corrupt,” warning of the inherent risk that authority can be abused.

He urged policymakers to ensure that measures designed to raise funds do not compromise Indonesia’s credibility in the global fight against money laundering.

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