Financial institions told to adopt money laundering policy
Financial institions told to adopt money laundering policy
Fitri Wulandari, The Jakarta Post, Jakarta
The Ministry of Finance warned nonbank financial institutions
to set up money laundering policies before this month's deadline,
or risk administrative sanctions.
"If they fail to meet the deadline, the government would apply
sanctions ranging from warnings to the freezing of their
licenses," Director General of Financial Institutions at the
Ministry of Finance Darmin Nasution told reporters on the
sidelines of a seminar on the Know-Your-Customer principle on
Tuesday.
Nonbank financial institutions are required to come up with
guidelines to implement the above principle by June 30. The
guidelines are to help the institutions detect money laundering
transactions.
The ministry has also required nonbank financial institutions
to set up a task force in their respective companies to supervise
the implementation of the guidelines.
Darmin said that so far, only around 20 to 30 percent of
nonbank financial institutions had submitted their guidelines to
the ministry.
He said the requirement was made based on the recommendation
from the Paris-based Financial Action Task Force (FATF) on money
laundering last year.
The government has been trying hard to remove Indonesia from
the FATF's list of countries deemed uncooperative in the world's
fight against money laundering.
In the banking sector, Bank Indonesia has also been putting
pressure on local banks to adopt the know-your-customer
principle.
The government is hoping that the country could be excluded
from the blacklist at the next FATF meeting in October.
One of the conditions demanded by the FATF is an amendment to
the country's money laundering law so that it meets the
international standard.
"Should Indonesia fail to show improvement at the next FATF
meeting in October, the money laundering watchdog will apply
countermeasures," Minister of Finance Boediono said.
Sanctions against noncooperative countries and territories
(NCCT) could include the freezing of government cash assets
overseas, imposition of premium charges on transactions made by
local companies with foreign companies, and rejection of letter
of credits (L/Cs) issued by Indonesian banks.
Boediono said the amendment of Law No. 15/2002 on Money
Laundering was the main point of the FATF assessment.
The government has submitted the draft amendment of the law to
the House of Representatives on June 9. One of the main changes
was cutting down the time allowed for banks to report suspicious
transactions to three days, from the 14 days under the existing
law.
The draft amendment also excludes a clause requiring banks and
financial institutions only to report suspicious transactions
valued at Rp 500 million or more. The clause will be replaced
with one stipulating that all dubious transactions must be
reported to authorities, with an additional clause that bans
banks or other financial institutions from passing on information
about the reported transactions to other parties.
Yunus Husein, chairman of the Financial Transaction and
Report Analysis Center (PPATK) said the House had promised to
finish deliberating the amendment before the October FATF
meeting.
PPATK is a body tasked with analyzing and investigating
questionable financial transactions in the country.
Yunus said that Bank Indonesia had received up to 156 reports
from banks on suspected money laundering, of which some 28
financial transaction reports had been submitted to the police.
"There will be further investigations to verify whether they
are money laundering practices or not," he said.
Money laundering is the practice of converting money generated
from corruption, bribery, smuggling, bank-related crimes, drug-
related crimes, human-trafficking, gambling and terrorism into
legal investments.
Based on past reports, funds alleged to have been part of
money-laundering networks amount to about 2 to 5 percent of the
world's gross domestic product, or about US$600 billion.
Eyebox
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List of NCCTs as of June 20, 2003:
1. Cook Island 6. Nauru
2. Egypt 7. Nigeria
3. Guatemala 8. Philippines
4. Indonesia 9. Ukraine
5. Myanmar
Indonesia was placed on the NCCTs list during the second
review of NCCTs in June 2001.
"It noted with concern the failure by the governments of
Indonesia and Myanmar to enact significant reforms since June
2002 to address their remaining deficiencies," the fourth review
on NCCTs (June 18-20) noted on Indonesia's progress.
The fourth review on NCCTs has removed St. Vincent and the
Grenadines off the list.
Source: www1.oecd.org/fatf