Corporate Crime And Its UBO Under Indonesia’s New Penal Code And Criminal Procedures.

Corporate Crime And Its UBO Under Indonesia’s New Penal Code And Criminal Procedures.

Introduction

The development of corporate criminal law in Indonesia reflects a significant paradigm shift in how economic crimes and corporate misconduct are addressed. With the enactment of the National Penal Code through Law No. 1 of 2023 (“KUHP 2023”) and the Criminal Procedure Code through Law No. 20 of 2025 that commenced on 2 January 2026 (“KUHAP 2025”), Indonesia has formally positioned corporations as subjects of criminal law. This transformation aligns with broader national legal policies emphasizing restorative, corrective, and rehabilitative justice, while still ensuring accountability and asset recovery.

This article discusses the concept of corporate crime, corporate criminal liability, procedural mechanisms under the new KUHAP 2025, and the introduction of modern enforcement tools such as Deferred Prosecution Agreements (DPA).

Legal Policy Direction in Corporate Criminal Law

Indonesia’s legal policy is guided by the National Long-Term Development Plan (RPJPN) 2025–2045 and Law No. 59 of 2024. These frameworks emphasize:

• Modern, efficient, and integrated law enforcement;
• Restorative, corrective, and rehabilitative approaches;
• Strengthening asset recovery and financial restitution;
• Transformation of the prosecution system toward a Single Prosecution System; and
• Enhanced supervision of law enforcement institutions supported by information technology.

Within this framework, criminal law is positioned as ultimum remedium (the last resort), particularly in economic and corporate crimes, where financial recovery and governance reform are prioritized over punitive imprisonment.

Corporations as Subjects of Criminal Law

Under Article 45 of KUHP 2023, corporations are recognized as legal subjects capable of bearing criminal responsibility. Corporations include:

• Legal entities such as limited liability companies, foundations, cooperatives, and state-owned enterprises;
• Business entities such as firms and limited partnerships; and
• Associations, whether incorporated or unincorporated.

Criminal liability may be imposed not only on the corporation itself but also on corporate controllers, including directors, managers, beneficial owners, and individuals who exercise effective control over corporate actions.

Concept and Typology of Corporate Crime

Corporate crime may take several forms, including:

1. Crimes committed by corporations for corporate benefit;
2. Crimes committed for corporations by individuals acting within corporate structures;
3. Crimes committed against corporations, such as embezzlement or asset theft by employees.

In corporate criminal liability, the actions of corporate organs are treated as the “directing mind” of the corporation, where unlawful acts are conducted within the scope of corporate activities, benefit the corporation, are tolerated as corporate policy, or occur due to the corporation’s failure to prevent or control misconduct.

In the view of corporate criminal liability, both the corporation and its responsible persons may be prosecuted jointly. A corporation may be held criminally liable if:

• The offense falls within the scope of the corporation’s business or activities;
• The act provides unlawful benefit to the corporation;
• The act is accepted or tolerated as corporate policy;
• The corporation fails to take necessary preventive measures; or
• The corporation allows the offense to occur.

Ultimate Beneficial Owner (UBO) and Corporate Criminal Liability

The Ultimate Beneficial Owner (UBO) refers to the natural person who owns, controls, or receive benefit from a corporation, whether directly or indirectly. A UBO may not formally appear as a director, commissioner, or shareholder, yet exercises decisive influence over corporate decisions or enjoys the economic benefits generated by the corporation.

The recognition of UBOs in Indonesian law under KUHP 2023 and KUHAP 2025 integrate the UBO concept directly into criminal liability, marking a decisive shift in corporate crime enforcement.

Under the new criminal law framework, criminal responsibility for corporate crime may be imposed not only on the corporation and its formal management, but also on parties who exercise effective control (penanggung jawab korporasi). These include order-givers, controllers, and beneficial owners, where their control or benefit is linked to the commission of a crime.

In corporate crime cases, the intent (mens rea) of the UBO may be attributed to the corporation where:

• the offense benefits the corporation or the UBO;
• the conduct reflects corporate policy or tolerated practice;
• the UBO exercises decisive influence over strategic or operational decisions; or
• the corporation fails to implement adequate preventive or compliance measures.

Thus, the UBO functions as the “directing mind” behind corporate conduct, even when acting informally or indirectly.

Procedural Implications under KUHAP 2025

KUHAP 2025 allows corporations and their UBOs to be prosecuted jointly as defendants. Investigative and coercive measures, including asset tracing, seizure, and confiscation, may be applied to assets beneficially owned or controlled by the UBO, regardless of whose name the assets are formally registered under. This procedural design strengthens the “follow the money” and “follow the asset” approach, ensuring that criminal proceeds cannot be insulated through ownership layering.

UBO Disclosure and Deferred Prosecution Agreement

Transparency regarding UBO identity is a critical factor in assessing eligibility for a Deferred Prosecution Agreement. Courts and prosecutors evaluate whether the corporation has:

• disclosed its true beneficial ownership;
• ensured UBO cooperation with law enforcement; and
• implemented governance reforms that effectively restrain UBO control over illegal practices.

Failure to disclose or involve the UBO undermines the credibility of a DPA and may result in the continuation of prosecution.

Asset Recovery and Beneficial Ownership

The emphasis on asset recovery in corporate criminal law directly targets assets held for the benefit of UBOs. Through confiscation, restitution, and non-conviction-based asset forfeiture mechanisms, the state may recover assets derived from corporate crime even where ownership is obscured by legal formalities.

This reinforces the principle that beneficial ownership, rather than nominal ownership, determines criminal accountability and financial exposure in corporate crime cases.

Corporate Criminal Procedure under KUHAP 2025

KUHAP 2025 dedicates a specific chapter to corporate criminal procedure. Key features include:

• Corporations are summoned and examined through designated corporate representatives;
• Coercive measures applicable to individuals may be applied mutatis mutandis to corporate controllers;
• Restorative justice mechanisms may be applied, particularly for first-time corporate offenses involving restitution and corrective actions;
• Formal and material requirements for indictments include detailed corporate identity and clear description of the alleged offense.

Deferred Prosecution Agreement (DPA)

One of the most significant innovations in KUHAP 2025 is the Deferred Prosecution Agreement. A DPA is a legal mechanism allowing prosecutors to suspend prosecution against a corporate offender under certain conditions.

The objectives of DPA include:

• Encouraging legal compliance;
• Ensuring recovery of state or victim losses;
• Improving corporate governance; and
• Enhancing efficiency in criminal justice proceedings.

Furthermore, a DPA has to fulfil conditions such as:

• Payment of restitution or compensation;
• Implementation of compliance and anti-corruption programs;
• Ongoing cooperation with law enforcement; and
• Other corrective measures deemed necessary.

The agreement must be reviewed and approved by the court, which assesses its legality, proportionality, and societal impact. Failure to comply with a DPA allows prosecutors to resume criminal proceedings.

Settlement Fines (Denda Damai)

KUHAP 2025 also introduces settlement fines, allowing certain economic crimes—such as taxation, customs, and excise offenses—to be resolved outside court proceedings through payment of agreed fines, subject to approval by the Attorney General. This mechanism further reinforces the restorative and efficiency-oriented approach in corporate crime enforcement.

Conclusion

Indonesia’s new corporate criminal law regime marks a progressive shift toward modern, accountable, and economically rational law enforcement. By recognizing corporations as criminal subjects, emphasizing asset recovery, and introducing mechanisms such as Deferred Prosecution Agreements (DPA) and Economic Peace Fines, the KUHP 2023 and KUHAP 2025 aim to balance justice, efficiency, and economic stability. Corporate criminal law is no longer focused solely on punishment, but on restoring losses and strengthening corporate governance for sustainable development.

For Further Information, Please Contact:

MetaLAW, Legal Consultant, Jakarta, Indonesia

general@metalaw.id