RI under review for laxity in fighting money laundering

JAKARTA (JP): Indonesia is being investigated by an international antimoney laundering body for not doing enough to curb the flow of dirty money into the country, a senior official of the central bank said here on Tuesday.

Central bank deputy director for legal affairs Yunus Husein said that the Financial Action Task Force (FATF), which was formed by G-7 member countries in 1989 to fight international money laundering activities, has included Indonesia in its inquiry for the first time since its establishment.

Yunus said the FATF officials started the review late last month and would scrutinize Bank Indonesia, the National Police, the Ministry of Finance and the Ministry of Justice and Human Rights.

The inquiry, which will last until June, is being conducted due to the lack of commitment on the government's part to fight international money laundering activities, he said, adding that Indonesia did not only lack financial support and human resources but also had insufficient legal instruments to fight money laundering.

Last year, the FATF listed 15 countries including the Philippines, Lebanon, Israel, Russia, Liechtenstein, Bahama, Panama and several islands in the Caribbean on its list of non- cooperative countries and territories (NCCTs).

FATF reviewed 29 countries last year.

"If Indonesia is blacklisted, it will further damage international confidence in the country's banking industry," he told reporters after addressing a seminar on money laundering.

International banks would, for example, no longer accept letters of credit (L/Cs) issued by local banks as a consequence of being included on the list, he said.

Being a noncooperative country in fighting money laundering activities, Indonesia could also risk being isolated by the international banking community, he said.

Yunus also said that Bank Indonesia had proposed a draft law on curbing money laundering to the House of Representatives as part of the central bank's commitment to fight the flow of dirty money into the country.

But the antimoney laundering bill, which was submitted in December last year, has not yet been deliberated by the House, he said.

According to him, money coming from corruption, smuggling, banking crimes, narcotics and drug operations, terrorism, and the trading of women, children and slaves was considered as ill- gotten money in the draft law.

The bill also recommends the establishment of a commission on money laundering, as well as a center for the assessment of financial transactions, he said.

According to some estimates, worldwide money laundering activities per year amount to about US$400 billion. (05)