<![CDATA[This study analyzes the implementation of penal mediation within the Indonesian criminal justice system, specifically for fraud and embezzlement offenses. Although adopted through the Indonesian National Police Chief Circular Letter No. SE/8/VII/2018, penal mediation faces significant challenges in achieving a harmonious integration of the principles of justice, legal certainty, and utility. Using a normative juridical method and qualitative analysis through the lens of Lawrence M. Friedman's legal system theory, this research reveals a critical misalignment between its theoretical promise and practical application. The findings identify the root causes as the absence of a strong legal foundation, fragmented authority among institutions, and the dominance of a positivist legal culture. As its primary contribution, this study formulates a holistic, systemic reformulation framework comprising: (1) the strengthening of legal substance through umbrella legislation that standardizes formal and material requirements; (2) structural reform through the certification of independent mediators and deeper integration of the process into the integrated criminal justice system; and (3) a contextual cultural approach that accommodates socio-local wisdom. The proposed framework is designed to harmonize the three dimensions of the legal system to establish a penal mediation mechanism that is legitimate, just, and effective.]]>
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