Govt to step up efforts to curb money laundering

Govt to step up efforts to curb money laundering

Dadan Wijaksana, The Jakarta Post, Jakarta

The government plans to quickly set up an independent anti-
money laundering agency in a bid to remove the country from a
blacklist of states accused of not cooperating in the
international fight against money laundering.

Deputy director of Bank Indonesia's legal directorate Yunus
Husein said on Tuesday that the anti-money laundering agency, to
be known as the Financial Transaction and Report Analysis Center
(PPATK) would be established in August, much quicker than
anticipated under the initial timetable established under the new
money laundering law.

The Paris-based Financial Action Task Force (FATF) has placed
Indonesia, along with several other countries, on its blacklist
of countries deemed as "uncooperative" in fighting money
laundering.

The FATF is a global task force set up in 1989 under the
auspices of the Organization for Economic Corporation and
Development (OECD).

One of the reasons why Indonesia had not been removed from the
FATF's blacklist was the fact that despite the recent enactment
of the money laundering law, the task force had yet to see any
real action from the government to deal with the problem, Yunus
said.

"Hopefully, this (the establishment of the PPATK) will serve
as a point in our favor," Yunus told reporters.

The PPATK would be in charge of analyzing and investigating
reported suspicious transactions, as well as individuals and
financial institutions who failed to report suspicious financial
transactions.

Money laundering is the practice of converting money generated
from corruption, bribery, smuggling, banking-related crimes,
drug-related crimes, human trafficking, gambling and terrorism
into legal investments.

Although there is little hard data on the scope of money
laundering activities here, Indonesia has long been regarded as a
haven for the practice.

President Megawati Soekarnoputri signed the money laundering
law on April 17, following approval by the House of
Representatives.

The enactment of the law had previously been widely expected
to get the country of the blacklist.

However, last week's meeting of the Task Force in Paris
decided that Indonesia was as yet ineligible to be removed from
the list and that more action was still needed.

The Task Force has also demanded that the country revise some
parts of the law as they are deemed uncommon compared with
international standards.

For instance, the Task Force questioned the fact that the law
categorized suspicious transactions as money laundering only when
they were worth more than Rp 500 million (some US$65,000).

The law stipulates that financial institutions or banks must
report to the authorities if they uncover any suspicious
transactions involving at least Rp 500 million.

The Task Force feared that the government would be reluctant
to act when the transactions involved amounts of less than Rp 500
million.

Elsewhere, Yunus, a member of Indonesia's delegation to the
FATF meeting, said that to improve the country's image as a
member of the international community, the current law should be
revised.

"We need to revise that (the law) to bring it into line with
international standards, but it will take time."

Inclusion on the FATF blacklist has a number of consequences.

Among the steps that task force member governments can take
against blacklisted countries are: warning multinational
corporations away from doing business in those countries; forcing
banks to collect detailed information before conducting
transactions with individuals or companies in those countries;
and making it more difficult for banks which base their business
operations in those countries.

Last week, the FATF removed four countries, including Israel,
Hungary, Lebanon, and St. Kitts and Nevis from its blacklist.