Money laundering measures could risk RI competitiveness

Money laundering measures could risk RI competitiveness

Zakki P. Hakim, The Jakarta Post, Jakarta

In its effort to remove Indonesia from the list of non-
cooperative countries in the global fight against money
laundering, the government should not adopt measures that would
be harmful to local businesses and affect competitiveness, a
business group says.

Indonesian Chamber of Commerce and Industry (Kadin)
representative Thomas Darmawan said the government should
consider input from the business community before adopting any
anti-money laundering measures set by international institutions.

"The measures could mean more paperwork and confirmations,
which would eventually result in extra costs for exporters and
importers," Thomas told The Jakarta Post over the weekend.

International money laundering watchdog Financial Action Task
Force (FATF), a Paris-based agency set up by some developed
nations, decided on Friday to retain Indonesia and other five
nations on its list of non-cooperative countries and territories
in the battle against money laundering.

However, FATF has agreed to send their envoys, possibly in
January next year, where Indonesia might be able to convince the
global watchdog to remove the country from the list by presenting
measures adopted by the government to stamp out money laundering.

Thomas urged government to negotiate with the FATF into not
accepting rules that would hamper businesses in the country.

"The business community here fully supports efforts to fight
money laundering, but we must be careful in adopting or ratifying
international regulations as they could unnecessarily hamper
businesses in the country by creating new costs," he said.

On the list of non-cooperative countries since 2001, Indonesia
risks several sanctions, which include higher risk premiums
imposed on local firms when making transactions with
international firms; termination of correspondence alliances
between local banks and banks in member countries of FATF; and
the rejection of letters of credit (L/Cs) issued by local banks.

Publicly listed Bank Negara Indonesia president Sigit Pramono
said that although his bank had yet to suffer from such negative
consequences, he acknowledged the risks.

"There are risks that corresponding overseas banks might
complicate procedures in transactions with local banks. That
would be the biggest threat. And it could happen at any time,"
Sigit told the Post.

He said that it was the central bank's responsibility to
ensure all banks meet international prudential management
principles, which include the "know-your-customer" concept,
requiring banks to know where their customers' money come from.

Many banks still neglected checking up on their clients and
most customers preferred banks with less procedures than banks
with rigid rules, he said.

Money laundering is the practice of transferring funds
generated from criminal acts by investing them in legitimate
businesses. Such criminal acts include corruption, bribery,
smuggling, banking-related crimes, drug-related crimes, human
trafficking, gambling and terrorism.

Indonesia's Financial Transaction and Report Analysis Center
(PPATK) chairman Yunus Husein said there had been several cases
where local banks had already encountered difficulties in dealing
with foreign banks.

"Bank Mandiri had to have additional inquiries in London," he
said. Moreover, an Indonesian was once denied to exchange
currencies in the Netherlands, due to the non-cooperative list
status, he said.

Indonesia has made some attempts to get off the list by
adopting several measures, but to no avail. They include the
drafting of the anti-money laundering law and the establishment
of PPATK.

Under the law, PPATK is tasked with collecting, recording and
analyzing all suspicious financial transactions provided by banks
and non-bank financial institutions in the country. PPATK has the
authority to carry out audits on banks and other financial
institutions.

However, PPATK has no authority to freeze assets and/or
accounts belonging to suspected money launderers, monitor phone
calls or e-mail, or secretly record interviews or conversations
involving suspected money launderers.