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Probing the crazy rich

Jakarta Post Editorial - March 26, 2022

Jakarta – Several young Indonesians have over the past two years been frequently referred to as the "crazy rich" on social media, television news, newspapers and other mass media outlets because of their ostentatious life styles.

Even though the phrase crazy rich seems to be a reference to Kevin Kwan's international bestseller novel Crazy Rich Asians, which was published in 2013 and filmed in 2018, these people do not share any of the good characteristics of the rich Singaporean families and their offspring as described in the book.

The youngsters from several cities such as Medan, North Jakarta; Jakarta; Bandung, West Java; and Surabaya, East Java; who like to flaunt their wealth, luxury cars, houses and branded goods through social media and on television talk shows did not inherit vast sums of wealth like the crazy rich family members described in Kwan's book.

Instead, two of them were recently arrested and are now in police custody as suspects for operating an illegal money game known as binary options trading and money laundering estimated to have involved the equivalent sum of hundreds of millions of dollars in fraudulent transactions that trapped thousands of victims.

The National Police's Criminal Investigation Department has so far confiscated over Rp 122 billion ($8.5 million) worth of the suspects' assets, such as luxury houses and cars. But the Financial Transaction Reports and Analysis Centre (PPATK) suspects that the bulk of the fraudulently acquired money was transferred between September 2020 and December 2021 to Kingstown, a tax haven in the Caribbean.

The moral outcry from the crazy rich story is the reason why the police started investigations only recently despite the binary investment trading having run since 2019. Had the police not received reports on suspicious transactions from the PPATK? In view of the blatant displays of wealth and the big money flows through banks, the purchases of luxury cars and houses, why did the Financial Services Authority (OJK) and the Commodity Futures Trading Regulatory Agency (Bappebti) fail to detect the bogus trading or illegal investment platforms for so long a time?

We assume the tax intelligence division of the Directorate General of Taxes always monitor such ostentatious lifestyles and immediately follow up with auditing the tax returns of those crazy rich. Commercial banks are also supposed to uphold the "know your customer" code in handling transactions with customers. But why were those crazy rich seemingly able to make large transactions outside of their profile without alerting the PPATK?

There appears to have been a complete absence of government intervention until many victims of the fraud publicly complained and reported to the police. In fact, the PPATK said more illegal investment platforms would be revealed soon involving trillions of rupiah.

In view of the increasing complexity of trading and financial transactions, the OJK, the Trade Ministry and the Directorate General of Taxes need to set up strong cyber divisions to monitor and detect early on any signs of cybercrimes related to their respective areas of jurisdiction. The police cybercrime division simply does not have adequate technical competence to understand all commercial and financial transactions.

The OJK also needs to work harder to improve people's financial literacy. The concept of what is called financial literacy now has become increasingly broad, covering both information and behavior of all consumers regardless of their wealth or income.

Source: https://www.thejakartapost.com/opinion/2022/03/25/probing-the-crazy-rich.htm