House passes new money-laundering legislation
Fitri Wulandari, The Jakarta Post, Jakarta
The House of Representatives passed on Tuesday a new money- laundering law to help the country avoid financial sanctions from developed nations.
"The new law is aimed at combating money laundering, as well as other related crimes," Minister of Law and Justice Yusril Ihza Mahendra told reporters.
Yusril said that the new law was needed because the old one, issued last year, was deemed insufficient by the Paris-based Financial Action Task Force (FATF) to combat money-laundering crimes.
FATF is a global money-laundering watchdog set up by developed nations of the Organization for Economic Cooperation and Development (OECD).
Under the new law, for instance, there is no limit on the size of financial transactions that can be labeled as suspect. Under the previous law, only financial transactions involving more than Rp 500 million could be labeled as suspect, and had to be reported to the authorities.
"Any transaction suspected to involve money laundering using a financial institution should be reported, even if it is only for one cent," Yusril said.
The new law also reduces the reporting deadline for suspicious transactions to three days from 14 and widens the definition of money laundering to include gambling.
Additionally, the law facilitates active cooperation with other countries to combat cross-border money laundering.
Indonesia has been on the list of uncooperative countries and territories (NCCTs) of the FATF since June 2001. The FATF will convene early next month to decide penalties on uncooperative countries.
Sanctions against NCCTs could include imposition of premium charges on transactions with foreign companies, halting correspondence between Indonesian banks and their counterparts in FATF countries and rejecting Indonesian letters of credit.
The government hopes that Indonesia will not be penalized after approval of the new money-laundering law, although hopes for release from the blacklist could still take time, as the FATF would first wish to be convinced of the seriousness of the government in implementing the new law.
The U.S. has been particularly aggressive in pressing Indonesia to adopt international standards in the fight against money laundering since the Sept. 11 terrorist attacks.
Analysts have said, with rampant corruption and weak legal enforcement, Indonesia is a safe haven for money laundering.
Indonesia has joined with Asian and Western countries to apply measures to cut financing for terrorist groups. The measures include the establishment of a financial transaction and report analysis center (PPATK). Such an agency is tasked with receiving and analyzing reports on suspicious financial transactions.
Following the Bali bombings on Oct. 12 last year and the arrest of several terrorist suspects, the government has stepped up measures to tighten the country's financial system.
The fight against money laundering is also included in the list of government post-International Monetary Fund economic reform programs, which was unveiled on Monday. According to a government White Paper, banks must implement a know-your-customer principle in a bid to detect suspicious transactions. The requirement will also be adopted by the country's small rural banks.
Chairman of PPATK Yuinus Husein hoped that approval of the new money-laundering law would also pave the way for the FATF to remove Indonesia from the NCCT list.
"We shall report progress on the money-laundering law to FATF and other foreign institutions," he said.