Guidelines to fight money laundering
Guidelines to fight money laundering
Dadan Wijaksana, The Jakarta Post, Jakarta
The country's antimoney-laundering task force issued on Friday
several guidelines for local financial institutions, both banks
and nonbanks, to help them identify and detect any suspicious
financial transactions.
"This white-collar crime is a serious problem that needs the
attention of the banking industry," Yunus Husein, the chairman of
the Financial Transaction and Report Analysis Center (PPATK),
said at a media briefing.
He did not elaborate as to the amount of money that might be
involved in money-laundering practices in the country. But the
fact that Indonesia has long been regarded as one of the world's
most corrupt country could indicate the scope of the crime here.
The existing antimoney-laundering law defines the practice as
converting money generated from corruption, bribery, smuggling,
banking-related crimes, drug-related crimes, human trafficking,
gambling and terrorism into legal investments.
Reports have said that worldwide, the funds alleged to have
been part of money-laundering networks reaches about 2 percent to
5 percent of the world's gross domestic product, which stands at
about US$600 billion.
Yunus added that widespread money-laundering practices could
create distortion within the country's financial system.
According to the guidelines, financial institutions have to
train their employees to be able to detect suspicious financial
transactions.
It also outlines some tricks that are often used by money
launderers to convert their illegally-amassed funds into legal
investments. It is expected that banks and other financial
institutions would be more familiar with the tactics, and are
more able to detect suspicious transactions as early as possible.
Yunus acknowledged that the move was part of efforts to
intensify its campaign against money-laundering in the country,
which has been regarded by some as a safe haven for money-
laundering activities due to its lax regulations.
The country enacted the Law on Money Laundering last year, but
the government is preparing a draft to amend the law to make it
more suitable to international standards.
The amendment is needed as a prerequisite for being taken off
a list of nations billed as noncooperative in the world's fight
against money laundering. Failure to do so would put the banking
industry at great risk of getting slapped with countermeasures
from the Financial Action Task Force (FATF), an international
grouping of anti-money laundering bodies.
The countermeasures include a warning for multinational
corporations to stay away from doing business in the blacklisted
country and forcing banks to collect detailed data before
conducting transactions with individuals or firms in that
country.
Although there are plenty of modi operandi, money laundering can
be broken down into three major steps:
1. Placement: Putting funds that are generated illegally into a
country's financial system. This maneuver can be carried out in
the form of:
- Applying for credit at a bank, in which the payments to be made
are with illegal funds
- Smuggling cash between countries
- Providing financing for legitimate businesses through banks,
investment firms, etc.
- Buying prestigious gifts through banks
2. Layering: A process of covering up illegally generated funds
through various stages of transactions. The maneuvers are:
- Transferring funds between banks in a country, or between
countries, through a number of quick transactions
- The use of cash deposits as collateral to support legitimate
transactions
- Moving funds between countries through a legitimate business
network or a shell company
3. Integration: The use of illegal funds that have successfully
entered a country's financial system for both legal and illegal
businesses. The common maneuver in this category is selling their
illegal fortune, which has been laundered, to a fellow money
launderer.