Money laundering law seen as positive for the country

Money laundering law seen as positive for the country

The Jakarta Post, Jakarta

Bankers, businessmen and analysts hailed the country's newly
approved money laundering law, saying it would help clean up
business practices, as well as boost investor confidence in the
economy.

They also said that the new law was in line with international
standards.

"Not only will this eradicate illegal practices in Indonesia,
but it will also give the impression that our industry is
supported by money coming from legal sources," said businessman
Anton J. Supit, who also heads the Indonesian Footwear
Association (Aprisindo).

He added that the enactment of such a law has come as a
consequence of being part of the international community.

The House of Representatives passed the bill into law on
Monday, which is partly aimed at shedding the country's image as
a haven for money laundering.

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

Since developing countries often lack the necessary
regulations and knowledge to combat the practice, money
laundering has flourished.

Under the law, banks and other financial institutions are
required to report to the authorities if they uncover any
suspicious transactions involving at least Rp 500 million
(US$52,000).

But there have been concerns that the new law would put a
significant brake on the flow of badly needed investment into the
country.

Anton brushed off such concerns. "Those who should be afraid
(of the new law) are those who do transactions using money, whose
source cannot be verified."

Bank Internasional Indonesia (BII) managing director Rudy N
Hamdani also welcomed the new law, saying it would make banks and
other financial institutions more alert about their customers.

But, he added, since it was a new policy, efforts to inform
the public would be crucial to avoid customers staying away from
banks.

"Investors will not be discouraged, as long as they understand
this is for the good of the banking sector as well. So, a public
campaign is crucial," he said.

Economist Raden Pardede stressed the legal basis that the
authorities have to track down possible links to international
terrorism.

"This law will become the tool to curb illegal activities in
the country, including the transfer of funds from corruption and
terrorist-related activities," Raden said.

Raden added that this would strengthen the relationship of
Indonesia with the International Monetary Fund and the U.S.
government.

And in the long-term, this will serve as a stimulus for
investors to invest because the passage of the law should show
Indonesia's seriousness in curbing money laundering.

However, both Raden and Anton stated that the elimination of
illegal practices would all be down to how effectively the law is
implemented.

"It's all up to legal enforcers in the field to see whether
this works or doesn't (in curbing money laundering)," Raden said.

The law stipulates an independent agency to be called the
Center for the Reporting and Analysis of Financial Transactions
(PPATK) will soon be set up, which will be in charge of analyzing
and investigating reports on suspicious financial transactions.