Financial watchdogs ask for the House for grater power

Urip Hudiono, The Jakarta Post, Jakarta

Two financial watchdogs -- the Supreme Audit Agency (BPK) and the Financial Transaction Reports Analysis Center (PPATK) -- have asked the legislature for more power to create better monetary governance.

The BPK asked the House of Representatives to amend a 32-year- old law on the agency to give it more independence and authority to carry out audits down to the regional level.

Similarly, the PPATK requested a review of the antimoney laundering law to give it the authority to trace and freeze accounts with suspected ties to money laundering. The center also wants the power to sanction uncooperative financial firms.

BPK chairman Anwar Nasution said the agency needed more authority to lay out and implement its policies, as well as to determine its own budgetary needs. "This is to ensure our independence in monitoring the government's management of public finances."

The Constitution places the BPK on the same level as the government, the Supreme Court, the House and the Regional Representatives Council. Article 2 of Law No. 5/1973 on the BPK gives the agency the authority to audit the state's annual budget and report the results to the House.

"More power would enable the BPK to audit nonbudgetary funds, apart from the state budget," Anwar said. "It is also important for us to audit state-owned enterprises."

Nonbudgetary, or off-balance-sheet funds are basically non-tax revenues that state institutions collect but do not include in the state budget. A recent report on governance by the Asian Development Bank said these funds were particularly prone to corruption.

On the issue of regional autonomy, Anwar said the BPK should also have the power to audit regional budgets and regional enterprises.

Audits of regional companies and budgets are usually performed by internal auditors from the Development Finance Comptroller (BPKP), which has representative offices in every province.

In acknowledging that amending the law on the BPK and implementing the changes would take time, Anwar again called for the merger of the BPK and the BPKP. "We only have a third of the staff of the BPKP, so the merger would really help us carry out those audits."

Separately, in a hearing with House Commission II for law and human rights, PPATK head Yunus Hussein said the center needed more powers to fight money laundering.

"In Italy, the antimoney laundering agency has the legal power to freeze bank accounts two days after the account owners are named suspects in a money laundering crime," he said.

The PPATK, he said, also needed the authority to sanction uncooperative financial firms to force them to report suspicious transactions, as required in Law No. 25/2003 on money laundering.

"We also need cooperation from the police and prosecutors to process money laundering crimes and not just charge them as subsidiary offenses," he said.

Indonesia was removed from global money laundering watchdog Financial Action Task Force's list of noncooperative countries and territories last month.