Containing money laundering

Containing money laundering

By K. Basrie

JAKARTA (JP): An executive of the International Narcotics
Control Board (INCB) has called on Indonesia to soon establish a
law against money laundering to strike at crimes related to
narcotics and psychotropic substances.

Visiting INCB president Dr. Oskar Schroder told The Jakarta
Post in an interview Wednesday that members of drug trafficking
cartels and other organized international crime syndicates have
always found developing countries with sound economic growth like
Indonesia to be good havens for money laundering.

"You can fight those big international drug trafficking gangs
and cartels efficiently only if you cut them off from their
financial means," said Schroder.

The Vienna-based board is the quasi-judicial control organ for
the implementation of the United Nations' drug conventions.

According to Schroder, Indonesia's rapid economic development
needs a huge amount of money and has led the government to
encourage foreigners to invest here.

"Nobody knows exactly whether an investment is clean money or
dirty money. It's a problem," he said.

Moreover, Indonesia "is susceptible to drug trafficking
because it's an assembly of over 17,000 islands," said Schroeder.

Therefore, he said, Indonesia badly needs to establish a money
laundering law immediately, based on the 1988 UN Convention.

Giving no exact figures, Schroeder said drug trafficking
syndicates always have millions of dollars in deposits which are
ready to be "cleaned" in many legal projects all around the
world, particularly in developing countries.

Local bankers here have expressed worry about the absence of a
money laundering law.

"Money laundering has been haunting our banking system," a
Bank Indonesia director, Heru Soepraptomo, said at a seminar last
month, adding that the central bank had no clear-cut rules to
stop it.

According to Sutan Remy Sjahdeini, a director of the publicly
listed state-owned PT Bank Negara Indonesia 1946, Indonesia's
rigid regulations on banking secrecy and the absence of
regulations on money laundering have turned this country into a
haven for money launderers.

Worse still, criminals nowadays transfer their dirty money
between accounts and even by credit card across borders instead
of using suitcases, making it difficult for developing countries
to trace the money.

The secretariat of Interpol, the world police organization
based in Lyon, France, estimated the total amount of illicit drug
transactions had thus far reached US$175 billion. Some Interpol
members are worried that the money might have been used to
finance the activities of certain international terrorist groups.

According to the chief of Indonesia's Coordinating Body for
Drug Control, Brig. Gen. (ret.) Tony Sidharta, Indonesia has
never explicitly had a law against money laundering, due to its
open-door policy.

"But the members of the House of Representatives are now
revising the old law on narcotics to comprise the rulings on
money laundering," said Sidharta, who also accompanied Schroder
during the interview.

Sidharta said hopefully, the revision will be completed in
March.

A specific money laundering law, which will cover a wide range
of crimes, is still being deliberated at the House, he said.

In the meantime, Indonesian authorities -- as stipulated in
the Criminal Code -- have the right to seize a defendant's
property once they have collected enough material evidence to
support the action, said Sidharta.

According to Heru, the Attorney General's Office is
coordinating joint efforts between the central bank and the
Capital Market Supervisory Agency to draft a money laundering
law.

Heru also said the central bank was considering establishing
a rule requiring local banks to report large transfers from
foreign banks.

"Such transfers need to be reported. If not, people will
continue offering to transfer large sums of money into our
banks," Heru said, referring to agents which launder dirty money
from abroad.

But do we have any estimates of the amount of drug money that
has been laundered here?

Secretary of the National Central Bureau for Interpol Brig.
Gen. Ahwil Lutan said: "I have no idea about the amount. But the
fact is, most of the dirty money is kept at island states in the
Pacific, where it is invested."

So, there's no use worrying about money laundering in
Indonesia, Ahwil told the Post.

"Among the reasons are first, a developing country like us
still needs money for its economic growth and secondly, crimes
involving narcotics here are not as serious as those in the
United States, for instance," he said.

The current popular drug among Indonesian youths is Ecstasy,
which is mostly imported from European countries.

Acknowledging this fact, Schroder explained that most
psychotropic substances are produced in Europe, the home of big
pharmaceutical factories.

"Some European countries were hesitating to ratify the 1971 UN
Convention, but we of course try to keep on encouraging them. One
of their reasons for hesitating is to protect their own
industries so they can export those substances without any
control worldwide," Schroder said. "Many of the substances are
shipped to Africa, where the prices are much cheaper than those
of heroin or cocaine."

The recent issuance of Indonesia's first law on psychotropic
substances, which was based on the 1971 UN Convention, was
welcomed by INCB.

"We're very satisfied with the news and the results we learned
about during our visit here. We appreciate it very much that the
Indonesian government has made an enormous effort in taking steps
to help reduce the trafficking and misuse of these psychotropic
substances," he said. He hoped that more countries could follow
Indonesia's move.

"The international drug control system can only work
efficiently if all the countries cooperate based on the UN
convention and its implementation," he said.

During his five-day visit here, which ended last Thursday,
Schroder met top-ranking officials related to the drug control
system, collecting data about progress and steps which had been
taken by Indonesia so far. Among the officials he met were those
from the police, customs and the ministries of health, social
affairs, trade and industry, foreign affairs and justice, as well
as education and culture.