Fighting dirty money<\/p>\n
Indonesia should immediately strengthen its anti-money
\nlaundering (AML) measures, otherwise it will remain on the
\nFinancial Action Task Force (FATF) blacklist of developed
\ncountries and could face harsh sanctions, which would hinder
\nbusiness transactions with foreign parties.<\/p>\n
FATF will review Indonesia, which, together with 18 other
\ncountries, was blacklisted as a noncooperative country in 2001. A
\npositive assessment would lift Indonesia from the blacklist, but
\na negative review would retain it within the category of
\nnoncooperative countries.<\/p>\n
The developed countries grouped in the Organization for
\nEconomic Cooperation and Development may also classify Indonesia
\nas a high-risk country, a category that imposes risk premiums on
\nbusiness transactions with Indonesia and may restrict or even ban
\nIndonesian companies and banks from opening offices in OECD
\ncountries and vice versa.<\/p>\n
Indonesia joined the international campaign against dirty
\nmoney in April 2002 with the enactment of an AML law and the
\nestablishment of a politically independent Financial Transaction
\nand Report Analysis Center, which in other countries is often
\nknown as a financial intelligence unit.<\/p>\n
The center is in charge of analyzing and investigating reports
\non suspicious transactions and persons and financial institutions
\nthat allegedly fail to report suspicious financial transactions.<\/p>\n
The law was then highly welcomed for its elaborate and strong
\nprovisions, which, among other things, provides protection of
\nwitnesses testifying against suspected money launderers and of
\nthe identity of those who report suspicious transactions.<\/p>\n
The punishments are also heavy. People who receive money or
\nother financial assets, which they know or reasonably suspect to
\nbe derived from criminal offenses, are liable to prison sentences
\nof five years to 15 years and fines of Rp 5 billion to Rp 15
\nbillion.<\/p>\n
The legislation makes it compulsory for banks and other
\nfinance companies to report to the center any receipt of Rp 500
\nmillion (US$61,000) or more in cash or the equivalent sum in
\nforeign currencies. Failure to do so is liable to fines of Rp 250
\nmillion to Rp 1 billion. Offenders are also punishable by the
\nsame range of fines if they do not report suspicious
\ntransactions.<\/p>\n
The law even applies the "presumption of guilt" principle to
\nmoney laundering cases, whereby defendants are required to prove
\nthat their wealth was not the result of ill-gotten gain.<\/p>\n
However, FATF considers the measures stipulated in the law
\nstill fall below international standards and best practice, and
\nsince early this year has asked the government to strengthen the
\nlegislation.<\/p>\n
First, the Rp 500 million threshold for transactions that are
\nsubject to the law is considered too high to be effective in
\ncombating money laundering.<\/p>\n
The predicate crimes covered by the legislation, although they
\nalready encompass almost all major sources of dirty money gained
\nthrough corruption, drug trafficking, smuggling, bribery, banking
\ncrimes, crimes related to psychotropic substances and terrorism,
\nto trading in slaves, women and children, are seen as not broad
\nenough. The international community demands the law also
\nstipulates that proceeds from gambling be treated as dirty money.<\/p>\n
Moreover, according to FATF, the 14-day deadline for
\ncompulsory reporting of suspicious transactions by financial
\ninstitutions is too lenient, given the sophisticated information
\ntechnology that now allows for transactions to move money around
\nthe globe within minutes.<\/p>\n
Indonesia indeed needs to strengthen its AML measures, and
\namending the law to close any loopholes that can be exploited for
\nlaundering dirty money is an important step. After all, an
\neffective money laundering system will also help beef up the
\nanticorruption drive and the fight against other crimes, as it
\nwill make it extremely difficult for criminals to circulate their
\nill-gotten money into the legal financial system.<\/p>\n
However, FATF should not be too harsh on Indonesia at its
\nupcoming meeting. The developed countries should assess Indonesia
\nmore from its political determination to fight money laundering
\nand not from the number of money laundering cases that have been
\nbrought to court, nor the current capacity of its law enforcement
\nsystem.<\/p>\n
Money laundering is still a new concept within the Indonesian
\nfinancial system. Financial institutions have yet to be trained
\nto avoid dealing with criminal elements, to check the identity
\nand legitimacy of clients, especially new clients and those
\nacting on behalf of others.<\/p>\n
A "know your customer" or "due diligence" system has yet to
\nbe developed within the banking system, including the financial
\nand capital markets.<\/p>\n
Establishing an affective AML system takes time. AML programs
\nhave still to be prepared for all financial transactions, of
\ndifferent characteristics and different modes.<\/p>\n
This work alone is already an uphill task, as it involves the
\nformulation of policies, procedures and controls designed to
\nprevent financial institutions from being used to launder money.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/fighting-dirty-money-1447899208",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}