Fri, 07 Mar 2003

'House needs to revise antimoney-laundering law'

Dadan Wijaksana, The Jakarta Post, Jakarta

The House of Representatives (DPR) has to immediately revise the current Antimoney-laundering Law if Indonesia wants to avoid sanctions from developed nations and be taken off the list of countries being billed as noncooperative in the international struggle to stop money laundering, an analyst has said.

Yunus Husein, the chairman of the Financial Transaction and Report Analysis Center (PPATK), said that failing to do so would put the banking industry at great risk of suffering countermeasures from the Financial Action Task Force (FATF), an international antimoney laundering watchdog.

Speaking at a seminar on the subject on Thursday, Yunus said that any countermeasures would shake public confidence in the country's banking sector.

Countermeasures could include warning multinational corporations to stay away from doing business with blacklisted countries; forcing banks to collect detailed data before conducting transactions with individuals or firms in those countries; or making it difficult for banks to base their business operations in those countries.

FATF is a Paris-based global organization that was set up in 1989 under the auspices of the Organization for Economic Co- operation and Development (OECD).

Indonesia remains on the FATF's blacklist of uncooperative nations, despite having successfully enacted an Antimoney- laundering Law last year as a result of what many believe as the country's lack of follow-up measures.

The passage of the law was seen as progress by the FATF, but a revision of some of the clauses is still needed as they are deemed uncommon by international standards, Yunus added.

The most profound one should be the current categorization of suspicious transactions, which the Task Force finds unclear, he said. The existing law stipulates that banks or other financial institutions have to notify the authorities if they discover any suspicious transactions of at least Rp 500 million (US$56,180).

The FATF questioned the limit, as it means that an investigation could not be launched if the transactions were below that amount, even if they are alleged to have been generated from crime, Yunus added.

PPATK, which was established only months ago, is in charge of analyzing and investigating reported suspicious transactions, and the financial institutions and individuals who fail to report the suspicious financial transactions.

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

Although there is little on-the-ground evidence on money- laundering activities here, Indonesia has long been regarded as a safe haven for money launderers.

Elsewhere, Yunus said that the House had given a green light to deliberate the amendments to the law in May.

In a related development, it was revealed at the seminar that the police were investigating two financial transactions alleged to be money laundering.

Brig. Gen Suyitno, of the National Police's economic and special crimes unit, said that of the 11 reports that had been submitted by the central bank, two required follow-up action.