RI vows to combat money laundering

RI vows to combat money laundering

JAKARTA (JP): Coordinating Minister for the Economy
Burhanuddin Abdullah said that the government of Indonesia would
cooperate in the worldwide fight against money laundering.

Burhanuddin said over the weekend that in addition to the bill
to outlaw money laundering proposed to the House of
Representatives earlier this month, Bank Indonesia was preparing
a set of new regulations which would force banks to carefully
scrutinize the source of their customers money.

"The 'know your customer' regulation is expected to be
completed later this month," he told reporters late on Friday.

Burhanuddin, a former Bank Indonesia deputy governor, said
that a team from the so-called Financial Action Task Force
(FATF), which was formed by G-7 member countries in 1989 to fight
international money laundering activities, was expected to arrive
in Jakarta soon to check on the country's legal tools designed to
curb money laundering.

Earlier on Friday, the FATF added Indonesia to a money
laundering blacklist for not doing enough to curb the flow of
dirty money into the country.

Indonesia and five other countries, which were entered on the
list Friday -- Myanmar, Guatemala, Hungary, Nigeria, and Egypt --
will face increased scrutiny from the Paris-based task force,
whose 31 members include the world's major economic powers.

Burhanuddin acknowledged that the developed nations had been
warning Indonesia on the need to step up efforts to curb money
laundering since 1996. A failure to cooperate would further hurt
the country's relations with the international community, he
added.

Among the retaliatory steps that task-force member governments
might take against the blacklisted countries: warning
multinational corporations away from doing business in those
countries; forcing banks to collect detailed information before
conducting transactions with citizens or companies in those
countries; and making it more difficult for banks based in those
countries to operate overseas.

A Bank Indonesia official had earlier warned that if the
country was included on the blacklist it would further damage
international confidence in the domestic banking sector,
including the risk that international banks might no longer
accept letters of credit (L/Cs) issued by local banks.

Money laundering is the practice of converting ill-gotten
wealth, mostly obtained from drug trafficking, into legal
investments, particularly in developing nations that lack
measures to prevent it.

According to some estimates, the value of global money
laundering activities per year is around US$400 billion.

Despite the current political and economic woes, Indonesia
remains a target for investment, particularly as the Indonesian
Bank Restructuring Agency (IBRA) is offering some Rp 600 trillion
(US$53 billion) in banking assets for sale at discounted rates.

There has been speculation that some dirty money from
international organized crime may have entered Indonesia in the
form of legal foreign investment via a complex money laundering
process.

Indonesia's lack of exchange controls, and the strong appetite
for foreign investment amid conditions of low saving and
investment are seen as being among the factors encouraging the
recycling of dirty money in the country.

The government, however, proposed a bill to deter money
laundering to the House earlier this month.

The bill identified two new kinds of evidence that could be
used in investigating money laundering. The first relates to any
information that was sent, received or stored electronically,
other than electronic data interchange, electronic letters,
telegrams, telex and facsimiles. The second deals with documents,
which comprise manuscripts, pictures, sounds, photos, codes,
signals, and other meaningful data.

The bill will also provide for the establishment of a
commission on the eradication of money laundering activities.
The independent commission is expected to forge bilateral
cooperation with law enforcers, the finance ministry and the
central bank in carrying out investigations.

The bill would enable judges to gain the necessary information
from banks about the accounts of those suspected of involvement
in money laundering, despite the existence of the Banking Secrecy
Law. (rei)