House approves money laundering legislation

House approves money laundering legislation

Dadan Wijaksana, The Jakarta Post, Jakarta

The House of Representatives passed a bill on money laundering
into law on Monday, signaling the country's commitment to
fighting the practice and shedding its image as a haven for money
laundering.

Minister of Justice and Human Rights Yusril Ihza Mahendra said
the importance of the law was such that its passage could win
Indonesia wider support from the international community.

"With this (law), hopefully we can be regarded as cooperative
(in curbing money laundering)," Yusril told reporters after a
plenary session of the House to pass the bill.

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

Given the fact that Indonesia is known as one of the world's
most corrupt nations, there has to be money laundering occurring
in the country to legalize ill-gotten fortunes, Yusril said.

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. Such activities flourish in developing
nations, which often lack the regulations and laws to fight the
practice.

The enactment of the law comes at a crucial time, with the
government meeting with the Paris Club of creditor nations next
month to seek the rescheduling of some US$5.5 billion in
sovereign debts maturing in 2002 and 2003.

The rescheduling of the debts, both the principals and the
interest, is critical in helping to limit the 2002 state budget
deficit at a safe level of 2.5 percent of gross domestic product.

The foreign creditor nations of the Paris Club have demanded
that Indonesia have a money laundering law on the books as one of
the conditions for a rescheduling facility.

The passage of the money laundering bill also comes ahead of
the Paris-based Financial Action Task Force (FATF) meeting in
June, which will evaluate the performance of countries in curbing
money laundering activities.

FATF, a global task force set up in 1989 under the auspices of
the Organization for Economic Corporation and Development, has
placed Indonesia, along with several other countries, on its
blacklist of counties deemed "uncooperative" in fighting money
laundering.

Inclusion on FATF's blacklist has serious 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
citizens or companies in those countries; and making it more
difficult for banks based in those countries to operate overseas.

Indonesia's newly approved 34-page money laundering law
contains 10 chapters and 52 articles, most of which outline
measures to control attempts to hide illegally amassed funds.

Those convicted of money laundering will be subject to between
five years and 15 years in jail, plus between Rp 5 billion (about
US$510,000) and Rp 15 billion in fines.

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

Indonesian residents who either bring in or take out of the
country Rp 100 million in cash must report the money to the
customs office.

The new law also will become a legal basis for the
establishment of the independent Financial Transaction and Report
Analysis Center (PPATK).

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

The crimes covered by the law are so diverse as to include
money amassed through almost all illegal activities.

The law covers proceeds not only from corruption and drug
trafficking, but also from a wide range of other crimes,
including smuggling, bribery, banking crimes, crimes related to
psychotropic substances, terrorism, the slave trade and the
trafficking of women and children, gun trafficking, fraud,
kidnapping and theft.