Banks must quickly report suspicious transactions: Official

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.