Fighting dirty money<\/p>\n
Those who still don't believe that foreign, rather than
\ndomestic, pressures are often more effective to force the
\nIndonesian government to pursue reform measures, simply look at
\nthe speed and urgency in which the House of Representatives had
\nacted to strengthen the antimoney laundering (AML) law of 2002.<\/p>\n
The House on Tuesday approved a series of amendments to the
\nlaw not because of the politicians' great concern about the
\nrampant laundering of dirty money in the country but due to
\nstrong threats from the developed nations to impose hefty risk
\npremiums on all transactions with Indonesian parties.<\/p>\n
The government White Paper on reform agenda, which was
\nunveiled on Monday, also stipulates a comprehensive list of
\nmeasures to be taken within the next few weeks to strengthen the
\nAML regime.<\/p>\n
Compare the House treatment of this AML legislation to that of
\nmany other bills, which are not less important and yet which have
\nlaid ignored for more than a year on the House document shelf.<\/p>\n
The Paris-based Financial Action Task Force (FATF) on money
\nlaundering has threatened to take counter-measures against
\nIndonesia unless the government strengthened its AML system. Such
\npenalties would hamper international banking and trade
\ntransactions from Indonesia, which has been on the FATF list of
\nnon-cooperative countries and territories (NCCT) since 2001,
\ntogether with eight other countries such as Nauru, Nigeria,
\nMyanmar and the Cook Islands.<\/p>\n
The United States, the leader of the global campaign against
\nmoney laundering and terrorist financing, also has held up this
\ncountry with a very powerful gun -- the U.S. Patriot Act, which
\ncould isolate Indonesia virtually from all international
\nfinancial centers.<\/p>\n
The amendments will provide the 2002 AML law with stronger
\nteeth by: Giving more protection to those reporting suspicious
\ntransactions, shortening the reporting deadline for reporting
\nsuspicious transactions to three days, enhancing international
\ncooperation in combating cross-border money laundering, removing
\nthe limit on the size of transactions that can be labeled as
\nsuspicious, broadening the categories of crimes defined as the
\nsource of dirty money.<\/p>\n
These improvements will certainly gain a positive review from
\nFATF at its next plenary meeting in Stockholm, Sweden, early next
\nmonth and will consequently spare Indonesia from FATF's tough
\ncounter measures with their horrifying impacts.<\/p>\n
However, the stronger legislation measures alone would not
\nautomatically lift Indonesia from the NCCT list as FATF still
\nwants to see more evidence that Indonesia is really serious about
\ncombating dirty money. The best assessment Indonesia may get at
\nthe FATF meeting next month is being lifted out of the NCCT list
\nbut subject to close monitoring.<\/p>\n
This is simply understandable, at least within the Indonesian
\ncontext.<\/p>\n
Amending the law is one thing and properly enforcing the law
\nto achieve its goal is something else. For example, the
\ngovernment has significantly strengthened its anti-corruption
\nlaw, yet very few major graft cases have been brought to court,
\neven though Indonesia is perceived to be one of the most corrupt
\ncountries in the world.<\/p>\n
Likewise, not a single money-laundering case has so far been
\nbrought to court, even though the Financial Transaction and
\nReport Analysis Center (financial intelligence unit), which was
\nset up last year to enforce the AML law, has thus far received
\nmore than 250 instances of suspicious financial transactions for
\nfurther investigations and prosecution.<\/p>\n
The problem is that the center, known under its local acronym
\nPPATK, is not yet fully operational. It is inadequately funded.
\nAs a financial intelligence unit, which has to analyze complex
\nfinancial transactions and which must work under a high degree of
\nconfidentiality, the PPATK should have employed highly-skilled
\nand highly experienced financial experts with high integrity. But
\nthe center at present has less than 10 permanent staff and is
\npoorly equipped.<\/p>\n
PPATK will never be able to function effectively without full
\ncooperation from law enforcement agencies as the police and
\npublic prosecutors but the acute lack of legal clarity about the
\nPPATK function and scope of responsibility and authority makes it
\nextremely difficult for this center to gain cooperation from
\nother government agencies.<\/p>\n
Hopefully, these deficiencies will be addressed by the four
\npresidential decrees, which, according to the White Paper on
\nreform measures, will be issued within the next few weeks to
\nstrengthen the AML system.<\/p>\n
We are confident that FATF would not be too harsh on Indonesia
\nbut would treat it in gradual, proportionate and flexible manners
\nas long as the government acts in good faith in fighting against
\nmoney laundering.<\/p>\n
After all, money laundering is still a new concept within
\nIndonesian financial system. Financial institutions have yet to
\nbe trained to avoid dealing with criminal elements, to check the
\nidentity and legitimacy of clients.<\/p>",
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"sponsor": "Okusi Associates",
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