Government to issue new policy on money laundering

Government to issue new policy on money laundering

Dadan Wijaksana, The Jakarta Post, Jakarta

The fight against money laundering would appear to be
intensifying with the government announcing plans on Friday to
issue a ruling requiring non-bank financial institutions to find
out more about their customers so as to avoid illicit money being
used in transactions.

According to a press release from the Ministry of Finance, the
upcoming policy, while moving in accordance with international
prudential management principles, would also lessen the risk of
the local financial industry becoming the target of money
launderers.

"The ruling will require insurance firms, pension funds and
investment fund managers, and other firms to draw up policies and
guidelines to accommodate the concept, while being in line with
industry best practice and international standards," the press
release stated.

The policy would be similar to that of the "know your
customers" concept introduced earlier by Bank Indonesia for local
banks, which requires them to know where their customers' money
originates from.

Money laundering is the practice of transferring funds
generated from criminal acts by investing them in legitimate
businesses. Such criminal acts include corruption, bribery,
smuggling, banking-related crimes, drug-related crimes, human
trafficking, gambling and terrorism.

The release did not provide details but the move was deemed to
be the latest attempt to get the country off the list of
countries considered uncooperative in curbing such illegal
practices.

Indonesia is among 15 countries blacklisted by the developed
countries grouped in the Financial Action Task Force (FATF),
which operates under the auspices of the Organization for
Economic Corporation and Development (OECD).

Set up in 1989, the global organization is based in Paris.

The government has said that it hoped to be excluded from the
list at the next FATF meeting slated for February. The ruling
would add to a series of measures taken by the government with a
view to having the country's name cleared.

They include the passage of the Anti-Money Laundering Law in
April last year and the establishment of the Financial
Transaction and Report Analysis Center (PPATK) last December to
take charge of analyzing and investigating suspicious financial
transactions both by individuals and corporations.

Elsewhere, the ministry revealed that it hoped to officially
issue the ruling by the end of this month, adding that it was
currently gathering input from the industry.

Data shows that the amount of money in the country's non-bank
financial institutions is growing each year.

In the case of the insurance industry, for instance, assets
have been rising over the last couple of years with total assets
in 2001 amounting to Rp 64.9 trillion (about US$7.1 billion).

Of all non-bank financial institutions, however, the most
likely sector to be infiltrated by money laundering-generated
funds would be the investment firms, as they usually care less
about where their investors' money comes from.