House urged to immediately amend money-laundering law
House urged to immediately amend money-laundering law
Dadan Wijaksana, The Jakarta Post, Jakarta
The House of Representatives is being urged to pick up the pace
in deliberating an amended money laundering law, so that it can
be endorsed by September as required by the Financial Action Task
Force (FATF).
Yunus Husein, chairman of the Financial Transaction and Report
Analysis Center, and noted economist Faisal Basri said passing
the law was crucial to avoiding sanctions, the impact of which
would be severe on an economy already crippled by the prolonged
economic crisis.
"At the last FATF meeting, it was decided Indonesia would
remain on the blacklist of non-cooperative countries in the
drives against money laundering activities.
"They gave us until September to finish the deliberations, the
main prerequisite before being removed from the list," Yunus
said, referring to the June 18 to June 20 FATF meeting in Berlin.
Yunus said that the FATF -- a Paris-based international
grouping that works under the auspices of the Organization for
Economic Cooperation and Development (OECD) -- is scheduled to
meet again in early October.
The draft of the amendment was submitted to the House on June
8, but no schedule has been set for its deliberation, giving
rise to fear the endorsement will not be completed on time. This
fear is heightened because legislators are scheduled to take a
five-week recess starting early in July.
Failure to meet the deadline could prove costly, as Indonesia
would risk sanctions.
These include a much higher risk premium imposed on local
firms when making transactions with international companies,
termination of correspondence alliance between local banks and
banks in member countries of FATF and a rejection of letters of
credit issued by local banks.
Aside from that, there also could be sanctions from
international investors, in the form of putting Indonesia below
their investment radar. The worst result for Indonesia would be
if the U.S. implemented the Patriot Act, which forbids all
financial institutions in the U.S. from doing business with
individuals or financial institutions in countries that have
received money laundering countermeasures.
Taking all of this into account, Faisal said, Indonesia has no
other choice but to comply with the FATF's requirements.
"I cannot even imagine what would happen if the sanctions
materialized. That would only deepen our misery. A higher risk
premium would mean higher transaction costs, which would further
hurt our competitiveness," Faisal said.
He added that even without sanctions, Indonesia was already
lagging behind other countries in the region in terms of
competitiveness.
"We are less competitive than Vietnam, India, forget about
China. Sanctions would only put our economy on the brink of
collapse," he said.
Indonesia is still included on the money laundering blacklist
despite having enacted a money laundering law last year, because
the task force demanded some clauses be revised. First, FATF
wants banks and other financial institutions to be required to
report suspicious transactions within three days, compare to the
14 days in the current law.
Second, the amended law would include a clause requiring banks
or financial institutions to report to the authorities if they
found suspicious transactions of at least Rp 500 million.
Third, there would be a clause banning banks or financial
institutions from leaking the reported transactions to other
parties.
"In Berlin, they also point out one point that needs to be
added to the amendment, which is strengthening regulations on
nonbank financial institutions," Yunus said.