Govt to act on money laundering

Govt to act on money laundering

JAKARTA (JP): The government wants to draft rules to stop
money laundering, Bank Indonesia (the central bank) director Heru
Soepraptomo said yesterday.

"Money laundering has been haunting our banking system," Heru
told a seminar at the Jakarta Fairground.

He acknowledged the central bank had no clear-cut rules to
stop it.

"Related institutions must think of how to deter money
laundering," Heru said.

Sutan Remy Sjahdeini, a director of the publicly listed state-
owned PT Bank Negara Indonesia 1946, said earlier that Indonesia
had become a haven for money launderers.

The absence of regulations on money laundering and rigid
regulations on banking secrecy had created the haven, Sjahdeini
said.

He suggested the government draft a bill on money laundering
to improve public faith in the banking system.

Money laundering is when individuals or companies deposit or
transfer large amounts of money that were earned illegally.

Heru said the Attorney General's Office was coordinating
efforts to draft a bill and regulations to stop money laundering.

He said at least three institutions would help draft the bill,
including the Attorney General's Office, the central bank and the
Capital Market Supervisory Agency.

The Attorney General's Office would be responsible for
prosecuting money launderers. The central bank would monitor the
banking system for money laundering. And the Capital Market
Supervisory Agency would monitor the capital market.

Heru said the central bank was considering issuing a rule
requiring local banks to report large transfers from foreign
banks.

"Such transfers need to be reported. If not, people will
continue to offer to transfer large sums of money into our
banks," Heru said, referring to agents who laundered dirty money
from abroad.

Heru did not specify the minimum transfer which would have to
be reported to the central bank. He said this should be decided
after consultation with other institutions.

"If we use the ruling in the United States as a guide, the
minimum transfer would be US$10,000," Heru said.

Under the United States' Bank of Secrecy Act, financial
institutions must report cash deposits of US$10,000 or more, and
multiple deposits from depositors that add up to $10,000. These
transactions are reported to the Treasury and the U.S. Secret
Service.

The U.S. Money Laundering Control Act of 1986 requires that
banks and savings institutions have reporting systems to monitor
cash transactions under $10,000. Under new federal regulations,
some cash transactions under $10,000 must be reported in some
states.

The local banking system lets Indonesians and foreign
residents deposit large sums at banks without reporting their
money's origins.

Dirty money can be easily deposited in time-deposit accounts
at local banks without explanation.

Local tax officials are not authorized to investigate sources
of bank deposits. (rid)