Devi Asmarani, Jakarta – Indonesia yesterday amended a money-laundering law to curb illegal flow of funds and get the country off an international blacklist.
The much-awaited amendment to the 2002 Law on Money Laundering includes the tightening of procedures on financial transfers to comply with international standards.
It was passed by Parliament after a month of deliberation following international pressures on Jakarta to amend the law perceived as being too weak to put a check on illegal transfers of funds involving transnational crime organisations or terrorist networks.
Indonesia has been urged to tighten its security and deny terrorists access to funds after a car bomb outside Jakarta's JW Marriott hotel killed 12 people last month, the second major terrorist attack in the country since the October 12 Bali bombings.
The amendments passed by Parliament yesterday include the removal of a clause that limits investigations to only transfers of funds above a 500 million rupiah threshold. "We can investigate even one cent of money transferred," said Minister for Justice and Human Rights Yusril Ihza Mahendra. He said the amended law was made according to the standards set by the United Nations.
Mr Yusril said the amended law would also help the authorities investigate and prosecute the "original crimes" involved in the money laundering cases. These original crimes include corruption, smuggling of goods or people, embezzlement, illegal drugs trafficking, arms or people trafficking, kidnapping, terrorism, thefts, gambling and tax evasion, he said.
Banks and other financial institutions are obliged to report to the authorities any suspicious transfers of funds within three days, as opposed to 14 days in the previous law, after they detect the suspicious transfers. Violators face five- to 15-year jail terms and between 100 million rupiah and 15 billion rupiah in fines.
Mr Yusril said the law would help the country regain international confidence in its banking system, facilitate local businessmen in international commerce, and encourage investors into Indonesia.
Indonesia passed the law on money laundering last year but a task force to combat illegal fund flows set up by the Paris-based Organisation for Economic Cooperation and Development said it was not enough to check the flows of illegal money.
The agency kept Indonesia on a blacklist of nine countries in June and gave the country until October 1 to improve procedures. Other countries on the blacklist have been dealt with through sanctions for failing to improve their system.
Ukraine has seen 40 accounts belonging to its banks closed in several Western countries. But Indonesia has been spared from the sanctions, pending the amendment.
The amendment been hailed by businessmen and observers although they said the most important aspect in battling money laundering was the law enforcer.