Police welcome money laundering legislation

Police welcome money laundering legislation

Yogita Tahilramani, The Jakarta Post, Jakarta

The National Police welcomed the newly endorsed legislation on
money laundering, despite concerns that the law could cause
substantial capital outflow from the country's financial systems.

"It might be a little bit tougher for police detectives to
chase after money launderers after the passage of the bill ...
since the new law, we believe, might result in capital flight. In
any case, this is a good move and we welcome it," National Police
spokesman Insp. Gen. Saleh Saaf said on Tuesday.

"The police are working with airport customs officers, as well
as with the central bank, in regard to combating capital flight."

National Police detectives for economic crimes said on Tuesday
that some of the capital coming into the country, reportedly
including "dirty money" being laundered here, could be hurriedly
taken out of Indonesia due to the passage of the new law.

This, the detectives said, could in turn affect the country's
economy.

The House of Representatives endorsed the bill on money
laundering on Monday, marking Indonesia's first significant step
in fighting the crime and shedding its image as a haven for money
launderers.

The endorsement of the bill comes at a crucial time for
Indonesia, with the government meeting with the Paris Club of
creditor nations in April to seek the rescheduling of some US$5.5
billion in sovereign debts maturing in 2002 and 2003.

According to a National Police detective for drug crimes,
Brig. Gen. Wilhelmus Laturette, money laundering is the
conversion of substantial amounts of cash derived from illegal
businesses into "good or legitimate money".

Drug traffickers and dealers, white-collar criminals, tax
evaders, corruptors of state funds, bank defrauders and gamblers
are known to have effectively laundered dirty money by opening
overseas bank accounts in countries like Switzerland and Austria,
according to detectives here, who requested anonymity. They added
that it was extremely difficult to track down such bank accounts.

"Drug traffickers, tax evaders and white-collar criminals love
to open Swiss or Austrian bank accounts, or what we call
accounts in the islands ... like the Bahamas, the Cook Islands,
the Marshall Islands and the Cayman Islands. These are on top of
the list when it comes to secrecy and security regulations," one
detective for economic crimes said.

Indonesia's money laundering law states that those convicted
of money laundering will be subject to between five years and 15
years in jail, plus between Rp 5 billion (about $510,000) and Rp
15 billion in fines.

The new legislation states that financial institutions (banks)
must report to the authorities if they uncover any suspicious
transactions involving at least Rp 500 million. Indonesian
residents who either bring in or take out of the country Rp 100
million in cash must report the money to the customs office.

Currently, Indonesia's banking system is seen as a haven for
money launderers, as banks in the country are not subject to
adequate supervision or regulation.

Several Indonesian banks have been victimized in scandals that
may have been prevented if adequate safeguards had been in place.
The Bank Bali scandal, which helped bring down former president
B.J. Habibie, is a prime example of the complexity of money
laundering.