Marzuki calls for new law to curb money laundering

Marzuki calls for new law to curb money laundering

JAKARTA (JP): Indonesia needs a special law to curb money
laundering activities through the country's banking industry, a
senior official said here yesterday.

Chief of the Ministry of Finance's monetary and financial
analysis agency, Marzuki Usman, said the introduction of such a
law was urgently needed to detect the inflow of illegal money
from overseas.

"To prevent and limit money laundering practices, it is time
Indonesia established a law to prevent money laundering," Marzuki
said, as quoted by Antara.

Heru Soepraptomo, the managing director of Bank Indonesia
(central bank) said that besides introducing such a law,
Indonesian banks should also set a mechanism which would allow
them to know more about their clients.

It would be very helpful for banks to know their customers
better, while the law to prevent money laundering was pending, he
said about essential approaches for banks to curb laundering
activities.

Calls for the government to issue such a law were also aired
earlier this year by the International Narcotics Control Board
(INCB). The board said Indonesia needed the law to strike at
crimes related to narcotics and psychotropic substances.

The board said members of drug trafficking cartels and other
organized international crime syndicates always found "developing
countries with sound economic growth like Indonesia to be a good
haven for money laundering".

INCB president Oskar Schroder said in February, that the only
way to efficiently fight international drug trafficking cartels
was to cut them off from their financial means.

He said Indonesia was susceptible to drug trafficking and
money laundering practices not only because of the country's huge
size, but also because Indonesia's rapid economic development had
led the government to encourage foreigners to invest here.

Marzuki acknowledged yesterday that while an anti-money
laundering law was required, establishing one would not be easy.

He said an obstacle to such a law was an article related to
banking secrecy in the country's Banking Law, which imposed
strict penalties on bankers or other bank officials who revealed
information about their clients.

Marzuki said a ruling was therefore needed to accommodate the
anti-laundering law while at the same time continuing to protect
bank clients' confidentiality.

The anti-laundering law should not in any way discourage the
flow of direct investment because foreign investment was still
needed to sustain the country's economic growth.

"In other words, it is time to revise Law No. 7, 1992 on
banking and add the issue of money laundering to the revised
law," he said.

Heru said Indonesian banks found it difficult to prevent dirty
money from entering their banking systems, although suspicions
might arise.

"Banks don't have a legal basis to detect and prevent money
laundering," he said, as quoted by Antara.

Although Indonesia had ratified the 1988 United Nations
Convention against the trafficking of narcotics and psychotropic
substances, he said: "It is clear there is no legal basis for
declaring money laundering a criminal act".

He said banks should apply a "reporting system" which
compelled them to report any suspicion of money laundering to the
authorities.

"After this reporting system is established, technical
knowledge is then needed to detect money laundering practices,
which can be achieved if a bank 'knows' its customer," he said.
(pwn)