PPATK suspects money launderers behind stock rally
The Jakarta Post, Jakarta
The government antimoney-laundering agency admitted on Friday that "hot money" being laundered through the local stock market might have been a key driver behind the high-flying bourse in recent months.
Yunus Husein, chairman of the Financial Transaction and Report Analysis Center (PPATK), said that a money-laundering probe was in full swing.
"We don't have any numbers as yet, but we did receive reports on the matter and an investigation is already underway," Yunus announced during a discussion on Friday.
PPATK is tasked with collecting, recording and analyzing all information reported by financial service providers -- banks and non-banks -- both for suspicious transaction reports (STR) and cash transaction reports (CTR).
If their probe indicates criminal activity, all findings will be forwarded to the police or the Attorney General's Office (AGO) for further investigation.
Law No. 25/2003 on Money Laundering defines it as the practice of converting illegal money into legal investments. Most of the ill-gotten gains are derived from such things as corruption, bribery, smuggling, banking-related crimes, drug-related crimes, people trafficking, gambling and terrorism.
Yunus' remarks should confirm earlier suggestions by a number of economists that hot money had played a role in pushing the Jakarta Stock Composite Index to recent record highs, especially when taking into account that little had been done to improve the fundamentals of local companies.
The Jakarta stock market -- despite suffering a setback this week due to heavy profit-taking and the bird flu outbreak -- has been on an upward bound roller-coaster over the last several months.
The index is currently hovering at a level higher than it was before the 1997-8 economic crisis, reaching new record highs several times in recent weeks.
Under the money-laundering law, PPATK has the authority to carry out audits on banks and other financial institutions and to freeze assets and/or accounts belonging to violators once investigators -- the police or AGO -- declared them suspects.
PPATK is also authorized to monitor phone calls and e-mail, as well as secretly recording interviews or conversations with persons of interest.
Once someone is declared a suspect, the burden of proof is reversed and he or she has to prove his or her innocence.
However, Yunus acknowledged that the agency was playing a sort of passive role in the fight against money-laundering, saying it could only go into action after it received credible reports on suspicious activity.
In a related development, PPATK also confirmed that it was investigating a report alleging that a high-profile political party figure had received part of the Rp 1.7 trillion embezzled from state-owned Bank Negara Indonesia (BNI) in a lending scam.
Yunus did not provide the name or the party, but did predict that funds derived from money-laundering activities by or for political parties might increase during this year's national election campaigns.
There seems to be a gaping window-of-opportunity for such machinations, particularly because there is no law or regulation that authorizes any institution to track the sources of funds for each political party.
Under the election law, there merely a limitation on donations to political parties. But, Yunus said, there were no regulations on the sources of funds of political party members.