Tue, 10 Jun 2003

Money laundering bill sent to House for deliberation

Fitri Wulandari, The Jakarta Post, Jakarta

The government submitted on Monday a bill to the House of Representatives to amend the antimoney-laundering law amid increasing pressure from the international community to cooperate in the struggle against money laundering.

Yunus Husein, the chairman of the Financial Transaction and Report Analysis Center (PPATK), said that the State Secretariat submitted the draft law to the House on Monday afternoon after it was approved by President Megawati Soekarnoputri.

"Hopefully, it (the deliberation process) will be completed during this sitting period. Leaders of the House have pledged their commitment in speeding up its deliberation," Yunus told The Jakarta Post by phone on Monday.

PPATK is a body tasked with analyzing and investigating questionable financial transactions.

The submission of a new draft law came in the wake of threats from the Paris-based Financial Action Task Force on Money Laundering (FATF) to take tough action if Indonesia failed to meet its target of completing the amendment of Law No. 15/2002 on Money Laundering crimes before September 2003.

Yunus said the FATF had warned that it may impose high-risk premiums on all financial transactions by Indonesian financial institutions with their offshore counterparts.

Yunus said the organization was set to have a plenary meeting from June 18 to June 20 in Berlin to discuss actions to be taken against countries listed as Non-Cooperative Countries and Territories (NCCTs).

"They will review our progress. So they may take us off the blacklist or impose a new deadline (for Indonesia) to speed up the amendment process," Yunus said.

Indonesia remains on NCCT's list, despite the anti-money laundering law passed in April 2002 amid pressure from foreign donors, particularly the U.S. in the wake of the Sept. 11 attacks, in an attempt to cut the financing of terrorist groups.

However, the law was considered insufficient as FATF demanded that some clauses be revised to meet international standards.

Rampant corruption and weak legal enforcement have made Indonesia a safe haven for crime, analysts have said.

Key clauses in the draft law include one that shortens the time period for banks to report suspicious transactions from 14 days to three days.

The draft law also revokes a clause in the current law that requires banks and financial institutions to report any suspicious transactions valued at Rp 500 million or more. The clause will be replaced with one stipulating that all dubious transactions have to be reported to authorities.

Unlike the current law, the bill has a clause banning banks or other financial institutions from passing on information about the reported transactions to other parties.

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

Based on past reports, funds alleged to have been part of money-laundering networks reach about 2 percent to 5 percent of the world's gross-domestic product or about US$600 billion.

Chronology of Indonesia's antimoney-laundering law

June 2000: Indonesia is put on the list of Non-Cooperative Countries and Territories (NCCTs).

April 2002: The government passes Law No. 15/2002 on Combating Money Laundering crimes and establishes the Financial Transaction and Report Analysis Center (PPATK).

February 2003: In a plenary meeting in Paris, FATF decides Indonesia remains on the NCCT list but no countermeasure sanctions are imposed. The agency also demands Indonesia to amend the newly enacted antimoney-laundering law.

June 2003: PPATK meets with representatives of FATF in a preliminary meeting before a plenary session of FATF scheduled for June 18 to June 20 in Berlin.