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.