Banks must quickly report suspicious transactions: Official

The Jakarta Post, Jakarta

Banks will be required to report any suspicious financial transactions within three days as part of the industry's efforts to fight money laundering.

Chairman of the Financial Transaction and Report Analysis Center (PPATK) Yunus Husein said on Wednesday that the ruling was part of a revision of the existing money laundering law, which gives banks a longer period of 14 days to report suspicious transactions.

He said the revision was necessary to cope with the fast pace of current business transactions.

The new ruling is also in line with the international standard as established by the Financial Action Task Force (FATF), an international anti-money laundering group.

PPATK is a newly formed state agency in charge of analyzing and investigating suspicious transactions.

Money laundering is defined as the practice of converting money generated from embezzlement, bribery, smuggling, financial crimes, drug-related crimes, human trafficking, gambling and terrorism into legal investment.

Yunus said the amendment was expected to be endorsed by the House of Representatives in October at the latest.

"Currently, the draft revision is still under deliberation at the Ministry of Justice and Human Rights. Afterwards, the draft will be passed to the state secretary's office before being submitted to the House," he said.

FATF is a Paris-based global organization and was established in 1989 under the auspices of the Organization for Economic Co- operation and Development (OECD).

FATF still includes Indonesia on its list of uncooperative nations in the fight against money laundering, even though Indonesia enacted the money laundering law last year.

Although there is little on-the-ground evidence on money laundering activities here, Indonesia has long been regarded as a safe haven for money launderers, partly due to the country's lack of supporting regulations.

The FATF has regarded the enactment of the law as progress, but revisions are still needed to make it more effective.

Aside from the shorter reporting time frame, Yunus added, the FATF indicated that other clauses also needed to be revised.

For example, he pointed at the extant categories of suspicious transactions. The law stipulates that banks or other financial institutions must report any suspicious transactions involving at least Rp 500 million to the proper authorities.

The limitation means that an investigation could not be launched if the transactions are below this amount, even if the funds in question are alleged to have originated from illegal sources.

There must also be a clause, supported by fines and sanctions for violators who, excepting banks or other financial institutions, leak the reported transactions to other parties.

Yunus was hopeful that the amendment to the law would pave the way for the country to be removed from the FATF's list of uncooperative nations.

An exclusion from the list is needed so as to avoid sanctions, in the form of countermeasures, from the FATF.

FATF countermeasures against sanctioned countries include: Warning multinational corporations to refrain from doing business in the country; enforcing a rule that banks collect detailed data before conducting transactions with individuals or firms in the country; and heightening regulatory measures for international banks seeking to base their business operations in the country.

The FATF is due to convene in June and at year's end.