Overview of Minister of Law Regulation No. 2 of 2025 on Verification and Supervision of Ultimate Beneficial Owner of Corporations

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Authors

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In February 2025, the Minister of Law of the Republic of Indonesia (“MOL”) issued Regulation No. 2 of 2025 on Verification and Supervision of Ultimate Beneficial Owner of Corporations ("MOL Reg 2/2025"), replacing MOL Regulation No. 21 of 2019. Below, we summarize the critical aspects that companies need to be aware of to ensure compliance.

Overview

Building upon previous regulations, MOL Reg 2/2025 mandates all corporations to identify their ultimate beneficial owner (“UBO”) under the Know-Your-Beneficial-Owner principle (“KYBO”).^[1] UBO is defined as an individual who: ^[2]

1. has the power to appoint or dismiss the board of directors, commissioners, managers, supervisors, or controllers of the corporation;
2. exercises control over the corporation;
3. receives benefits from the corporation, either directly or indirectly;
4. is the actual owner of its funds or shares; and/or
5. meets the criteria outlined in the relevant laws and regulations.

In essence, UBO is the person who receives the primary profit or is the largest individual shareholder of the company.

MOL Reg 2/2025 also expands the scope of corporate entities required to comply with KYBO obligations. The following entities must now disclose their beneficial owners: ^[3]

1. limited liability company (Perseroan Terbatas or PT), which also includes individual company (perseroan perorangan);
2. foundation (yayasan);
3. association (perkumpulan);
4. cooperatives (koperasi);
5. commercial partnership (persekutuan komanditer);
6. general partnership (persekutuan firma); and
7. limited partnership (persekutuan perdata).

Obligations and Implementation

To comply with KYBO obligations, corporations are required to: ^[4]

1. annually update their beneficial owner information;
2. maintain accurate records of their beneficial owner; and
3. complete and submit questionnaires via MOL’s electronic system at the time of:
   1. establishment, registration, or ratification of a corporation;
   2. amendment to the articles of association of a corporation;
   3. amendment to data of a corporation; and/or
   4. reporting, amendment or update of information on beneficial owner. ^[5]

Verification

MOL Reg 2/2025 mandates that the verification of the ultimate beneficial owner must be carried out based on specific risk assessments (e.g., money laundering and terrorism financing risks) conducted by the following parties: ^[6]

Corporations [7]	:	Conduct research on the beneficial owner's information with supporting documents to verify accuracy, especially when reporting the establishment, changes, and updates.
Notary [8]	:	Required to verify beneficial ownership when their services are utilized in corporate transactions.
MOL [9]	:	Carry out through an examination of the beneficial owner information provided by the corporation and/or notary, as well as the questionnaire completed by the corporation.
Other Institutions [10]	:	Carry out in accordance with the legal framework and the authority of the relevant institution.

Analysis from the Minister

MOL, through the Director General of General Legal Administration, processes and analyses data related to the information and questionnaires to ensure the accuracy of the beneficial owner data provided by the corporation. ^[11] The process flow is as follows: ^[12]

• The Director General processes and analyzes the obtained data and cross-references it with the ID card (KTP), taxpayer identification number (NPWP), and other UBO's documents.
• If needed, the Director General may process and analyse the data in coordination with the relevant authorities, in accordance with their authority.
• In the event of discrepancies between the report and the examination, the Director General will conduct clarification, either directly or indirectly.
• The results of the clarification will be documented in a minutes of meeting and recommendations.

MOL may designate another beneficial owner based on the results of verification, analysis, and data processing. ^[13]

Administration Sanctions

A corporation that fails to report its beneficial owner or submits incorrect information regarding its beneficial owner may be subject to administrative sanctions, such as: ^[14]

1. Warning via MOL system or email;
2. Blacklisting, announced on the Directorate General's website; and
3. Blocking access to the AHU system.

The above-mentioned sanctions will be imposed in stages, unless special considerations apply ^[15], and may only be revoked once the corporation has fulfilled its obligation to report the correct beneficial owner, which will be processed by MOL or requested by the corporation electronically. ^[16]

With MOL Reg 2/2025 now in effect, corporations must ensure they comply with the updated requirements for beneficial ownership disclosure. Any corporations that are still under blocked status and/or listed on the blacklist will remain blocked and/or listed on the blacklist until they fulfil their obligations. ^[17]

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1. Article 2 (1) of MOL Reg 2/2025. ↩︎

2. Article 1 (2) of MOL Reg 2/2025. ↩︎

3. Article 2 (3) and (4) of MOL Reg 2/2025. ↩︎

4. Article 3 of MOL Reg 2/2025. ↩︎

5. Article 10 of MOL Reg 2/2025. ↩︎

6. Article 5 of MOL Reg 2/2025. ↩︎

7. Article 6 of MOL Reg 2/2025. ↩︎

8. Article 7 of MOL Reg 2/2025. ↩︎

9. Article 8 of MOL Reg 2/2025. ↩︎

10. Article 9 of MOL Reg 2/2025. ↩︎

11. Article 11 of MOL Reg 2/2025. ↩︎

12. Article 12-15 of MOL Reg 2/2025. ↩︎

13. Article 15 of MOL Reg 2/2025. ↩︎

14. Article 22-23 of MOL Reg 2/2025. ↩︎

15. Article 24 of MOL Reg 2/2025. ↩︎

16. Article 25 of MOL Reg 2/2025. ↩︎

17. Article 26 of MOL Reg 2/2025. ↩︎

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Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.

Go to

1. Overview
2. Obligations and Implementation
3. Verification
4. Analysis from the Minister
5. Administration Sanctions

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