JP\/7\/CIFOR
\nPart 2 of 2<\/p>\n
Banks can stop illegal logging<\/p>\n
Sukowaluyo Mintorahardjo
\nCommission III
\nHouse of Representatives
\nJakarta<\/p>\n
Bambang Setiono
\nCenter for International
\nForestry Research
\n(CIFOR)
\nBogor<\/p>\n
Last year, the Ministry of Forestry set timber production from
\nnatural forests at 6.8 million cubic meters. But the requirements
\nof the timber industry were approximately 60 million to 70
\nmillion cubic meters. Estimates suggest between 60 percent to 80
\npercent of the timber industry's supplies are obtained illegally.<\/p>\n
What is more frightening is that the industry's reliance on
\nillegal timber will keep increasing unless the capacity of the
\nindustry is significantly reduced. This is because the Ministry
\nof Forestry has set the allowable timber-cut from natural forests
\nfor 2004 at only 5.7 million cubic meters.<\/p>\n
But it seems the easy ride for the timber industry's high-
\nrollers may soon be over -- or at least has been made bumpier by
\na considerable degree. Under the proposed changes to existing
\nmoney laundering regulations, the banks will have no choice but
\nto become more accountable if and when forest and environmental
\ncrimes are officially designated as \"predicate offenses\".<\/p>\n
Listing forestry and environment crimes as predicate offenses
\nunder the revised Money Laundering Law has some wide-ranging
\nimplications for law enforcement and governance in both the
\nforestry and financial sectors.<\/p>\n
First, banks will have to enact greater due diligence when
\nproviding loans to the forestry sector. A \"know your customer\"
\nrule will require banks to determine whether their customers are
\ninvolved in illegal activities. In the forestry sector
\nspecifically, banks will be bound to take action against
\ncustomers known to use illegally logged timber.<\/p>\n
Second, banks will be obliged to monitor and report any
\nsuspicious transactions. The fact that an estimated 70 percent of
\ntimber in Indonesia is obtained from illegal sources raises the
\ncrucial question as to what constitutes a \"suspicious
\ntransaction\" in the forestry sector.<\/p>\n
Given the 70 percent figure of illegal timber, banks may well
\nbe obliged to treat every transaction involving forestry
\nactivities as suspicious -- at least until forestry companies can
\nprovide evidence to the contrary. This in turn will force
\ncompanies in the forestry sector to be more transparent and
\naccountable.<\/p>\n
Third, the law for illegal logging offenses will not only be
\nenforced upon the timber bosses' henchmen in the field, but also
\nupon the bosses' masters and the brains behind illegal logging
\nactivities. Up until now, the Wanalaga and Wanabahari operations
\nhave only succeeded in netting small fry caught red-handed in the
\nact of illegal logging.<\/p>\n
Enforcement operations to prevent banks from laundering
\nillegal logging money would be better able to identify the
\n\"godfathers\" who finance and benefit most from illegal logging
\nactivities.<\/p>\n
Fourth, the government will possess a new tool to enforce
\nforestry and financial laws. Listing forestry crimes as a
\npredicate offense will broaden law enforcers' options to cut off
\nsources of funding for illegal logging activities. Apart from
\nprosecuting actors directly involved in illegal logging, the
\ngovernment will also be able to press charges against
\ninstitutions that finance these activities.<\/p>\n
Fifth, new legal provisions will be available for law
\nenforcement and prosecution. With illegal logging activities, the
\nmoney made from tree felling is often sent overseas. Proposed
\nchanges to the Money Laundering Law will enable the government to
\npress charges against Indonesian nationals involved in money
\nlaundering activities, whether in Indonesia or overseas.<\/p>\n
This will be strengthened further through the government's
\ncooperation with the Financial Action Task Force, an
\ninternational organization monitoring money laundering laws
\nglobally.<\/p>\n
Considering the above benefits to both the forestry and
\nfinancial sectors in strengthening and expanding existing money
\nlaundering laws, it is only fitting that the legislature should
\nratify the proposed changes as proof of its commitment to
\neradicating forestry offenses, protecting forests, wiping out
\ncorruption and eliminating financial crimes in general.<\/p>\n
Perhaps then, crimes against forests and the environment will
\nbe considered just as evil as trafficking in women and drugs.<\/p>\n
Sukowaluyo Mintorahardjo, a legislator with the Indonesian
\nDemocratic Party of Struggle, is a member of Commission III of
\nthe House of Representatives (DPR), which oversees issues related
\nto agriculture and forestry, among others. Bambang Setiono is a
\nfinancial analyst at the Center for International Forestry
\nResearch (CIFOR).<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/jp7cifor-1447899208",
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"sponsor": "Okusi Associates",
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