BI issues new ruling on money laundering

JAKARTA (JP): Bank Indonesia has issued a new ruling to help curb money laundering activity, the central bank deputy governor Achjar Iljas said on Tuesday.

Achjar said that the "know your customers" regulation provided guidelines for banks to detect suspicious transactions and banking practices often used in the recycling of ill-gotten money from criminal activity.

"With the (new) regulation, banks are expected to be able to detect suspicious transactions," Achjar told reporters on the sidelines of a hearing between Bank Indonesia and the House of Representatives Commission IX on state budget and finance.

He added that the new ruling was issued on June 18 but was disclosed only on Tuesday. He did not provide details.

A Bank Indonesia public relations official said that the central bank would hold a news briefing on the new regulation on Wednesday.

The Financial Action Task Force (FATF), which was formed by 29 developed countries in 1989 to fight international money laundering activity, last week added Indonesia to its blacklist of countries considered uncooperative in the crusade against money laundering.

Coordinating Minister for the Economy Burhanuddin Abdullah seemed unaware that the regulation to curb money laundering had been issued.

Responding to the FATF warning on Indonesia, Burhanuddin told reporters last Friday that the government would cooperate fully in the global drive against money laundering.

He said that in addition to the bill to counter money laundering, which was proposed recently to the House of Representatives for deliberation, the central bank would soon issue a new ruling to curb money laundering.

Burhanuddin said that failure to cooperate in the fight against money laundering would further damage the country's relations with the international community.

Retaliatory steps that FATF member governments might take against the blacklisted countries include: warning multinational corporations against doing business in those countries; forcing banks to collect detailed information before conducting transactions with citizens or companies in those countries and making it more difficult for banks based in those countries to operate overseas.

Money laundering is the practice of converting ill-gotten wealth, mostly obtained from drug trafficking, into legal investments, particularly in developing nations that lack measures to detect and prevent it.

There has been speculation that some ill-gotten money from international organized crime may have entered Indonesia in the form of legal foreign investment via a complex money laundering process.

Indonesia's lack of exchange controls, and the strong appetite for foreign investment amid conditions of low saving and investment are seen as being among the factors encouraging money laundering in the country. (rei)