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
---------------------------------------------------------------- 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