Fri, 05 Sep 2003

Govt, House rush to amend Money-laundering Law

Dadan Wijaksana, The Jakarta Post, Jakarta

Under pressure to meet the deadline, a working team comprising government officials and legislators are speeding up the process of amending Indonesia's money-laundering laws to prevent international sanctions.

The 35-strong team was meeting and aiming to complete deliberations next week, Financial Transaction and Report Analysis Center (PPATK) chairman Yunus Husein said.

"The meeting will be held almost non-stop. If everything goes well, we'll complete it by Sept. 12, and then we'll have the new law (on money laundering)," Yunus said Thursday.

Passing the new law will be met with relief by the government, which has been under pressure by the Financial Action Task Force (FATF) -- a powerful global antimoney-laundering watchdog -- to complete the process by the end of September.

Should Indonesia fail, the international community might impose sanctions, the impact of which could impact severely on the country's still-fragile economy.

Should Indonesia meet the deadline, the country has a great chance of being lifted from FATF's list of non-cooperative countries and territories (NCCTs) in the fight against money laundering.

The next convention of the FATF -- a task force under the Organization for Economic Cooperation and Development (OECD) -- is slated for early October.

The sanctions would include a much higher risk premium imposed on local firms when making transactions with international firms, termination of correspondence alliance between local banks and banks in member countries of FATF and a rejection of letters of credit issued by local banks.

There could also be sanctions from international investors, but the worst of all is that Indonesia might be barred from doing business with the United States, the country's main export market.

The U.S. plans to introduce the Patriot Act, which forbids all financial institutions in the U.S. from doing business with individuals or financial institutions in countries that tolerate money laundering.

Indonesia is still on the blacklist as FATF considers that some clauses in the antimoney-laundering law enacted last month needed to be revised to comply with international standards.

First, FATF wants a law requiring banks and other financial institutions to report suspicious transactions within three days, compared to 14 days in the current law.

Second, the law should include a clause requiring banks or financial institutions to report to the authorities if they find suspicious transactions of at least Rp 500 million.

Third, the law should also have a clause banning banks or financial institutions from informing clients about their reports to antimoney-laundering agency.