February 15, 2002
The money-laundering bill, which is scheduled to be enacted by the House of Representatives within the next few weeks, is quite comprehensive, clear-cut and forceful, but so are most other laws in Indonesia. The basic question, though, will be whether there is determination to see it properly enforced. Or is the legislation being pushed through simply in response to international pressure?
In theory, the bill will make it extremely difficult for corruptors and other criminals in Indonesia to invest, deposit or move their ill- gotten gains, unlike now, when one can bring in hundreds of millions or even billions of rupiah in cash from the bank without raising any questions, nor alerting the authorities.
The draft legislation makes it compulsory for banks and other financial institutions to report to the authorities any receipt of Rp 100 million (US$9,520) or more in cash or the equivalent sum in foreign currency. Failure to do so will make them liable to a minimum fine of Rp 250 million and a maximum fine of Rp 1 billion. They are also punishable by the same range of fines if they do not report suspicious transactions.
But the crackdown on money laundering does not stop at financial institutions through which crooks usually try to clean up their dirty money.
The bill also stipulates that people who receive money or other financial assets, which they know or suspect to be derived from criminal offenses, are liable to minimum prison sentences of five years to a maximum of 15 years and by fines of at least Rp 5 billion or at the most Rp 15 billion.
The 52-article bill goes farther than simply strengthening the ability of law enforcement to investigate and prosecute crimes involving money laundering. It seeks to create an overall conducive environment for the fight against money launderers who try to legalize the origin of their money or property.
Learning from the major shortcomings of the law on corruption, the draft legislation stipulates provisions regarding the protection of witnesses testifying against suspected money launderers and of the identity of those who report suspicious transactions. The bill even rewards bonuses to tipsters whose reports lead to the uncovering of money-laundering crimes.
The crimes covered by the legislation are so diverse that the fight will hit almost all major sources of dirty money. The bill stipulates proceeds not only from corruption and drug trafficking but also from a wide range of other crimes, including smuggling, bribes, banking crimes, crimes related to psychotropic substances, gambling, terrorism, the slave trade and the trafficking of women and children.
Whether the legislation will have any teeth or not will depend on the Anti Money-Laundering Commission, which will be set up as an independent agency in charge of enforcing the legislation. The commission is responsible to the House and will be vested with the authority to investigate financial organizations and persons suspected of being involved in money-laundering crimes.
A Financial Transaction and Report Analysis Center will assist the commission to analyze and investigate reports on suspicious transactions and persons and financial institutions that allegedly fail to report suspicious financial transactions.
It is therefore most imperative that the individuals to be appointed to the commission and the staff members of the center should possess both a high level of technical competence and integrity because they are vested with so much power, among other things, to open and block the bank accounts of suspected persons or institutions. Most important too is that the commission and the center be adequately funded; otherwise they are likely to be compromised by offers involving large bribes.
As laundering crimes have grown hand-in-hand with globalization, the development of international payment systems and the complexity of financial transactions, the drive to eradicate money laundering will be less effective without alliances between countries and institutions. The fluidity of banking services across borders means that cash deposited in a checking account can be withdrawn worldwide with debit cards.
This is also the reason as to why Indonesia and many other developing countries have come under increasing international pressure to strengthen efforts to combat money laundering, especially after the Sept. 11 terrorist attacks on the United States, which are alleged to have been financed with funds moved through money laundering.
But even without international pressure, stronger efforts to combat money laundering will, in the first place, greatly benefit Indonesia as it will strengthen its fight against corruption and help the government to trace dirty money even after it has flown out of the country. Singapore has long been suspected of being the major destination of money, whether legal or illegal, leaving Indonesia. But since Indonesia has not yet enacted a law to combat money laundering, it cannot ask, on a reciprocal basis, for Singapore's assistance to investigate suspicious transfers from Indonesia.
More Information on Money Laundering
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