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.