Govt, House rush to amend Money-laundering Law

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.