Funds from Australia are helping recruit and send Indonesian fighters to join Islamic State (IS) in Iraq and Syria, authorities in Jakarta say.
Indonesia's Financial Transaction Reports and Analysis Centre (PPATK) has found "hundreds of thousands of dollars" from Australia are flowing to IS-supporting groups, its deputy Agus Santoso told a counter-terror conference in Jakarta on Monday.
"We have detected supporting funds from an Australian source to terrorist networks in Indonesia," Mr Agus said as quoted by The Jakarta Post newspaper.
"Although I cannot disclose the amount, I can confirm for sure that the amount does not reach the millions of dollars."
Densus 88, the national police counter-terror unit, was investigating, he said.
Domestically, funding for IS in Indonesia mostly came from businesses built by supporters, Mr Agus said.
PPATK had traced Rp 7 billion ($A687,500) worth of transactions from local businesses selling herbal medicines and books to fund terror activities as of February.
Indonesian authorities estimate more than 500 Indonesians have joined IS in Syria or Iraq.
According to the Jakarta Post, Australian Embassy spokesman Linda Kemp would neither confirm nor deny these allegations. "The Australian government values the long-standing cooperation between AUSTRAC and the PPATK," she said.
