Rendi Akhmad Witular, Jakarta – Despite the declared wide-ranging crackdown on corruption, Indonesia remains a haven for money launderers lured by rampant opportunities.
Weak law enforcement, a notoriously slack bureaucracy and the recent slowdown in the drive against money laundering have contributed to a rise in the number of suspicious financial transactions.
Although several key financial institutions are required to report any suspicious transactions to the money laundering watchdog, several of them are afraid to do so in cases involving influential figures. It may seem to some that the long arm of the law only touches those without connections to politicians or high-ranking military and police officers.
The Jakarta Post's Rendi Akhmad Witular delves into the progress made curbing money laundering in the special report on this page.
Now that Indonesia has gotten off the list of countries deemed uncooperative in the global fight against money laundering, the government's efforts to stamp out the crime seem to have run out of steam.
Recent figures suggest the country is once again becoming a haven for criminals who want to make large sums of ill-gotten cash appear legitimate.
"As pressure from the international community decreases, the government seems to lose that encouragement to step up efforts to prevent money laundering in our financial system," said Yunus Husein, chairman of the Financial Transaction Reports and Analysis Center (PPATK), Indonesia's money laundering watchdog.
According to PPATK, there was a 95 percent jump in the average number of dubious financial transactions reported to the agency from January through April, compared to last year.
During that period, the watchdog received an average of 335 reports per month, compared to 171 reports last year. It has already received 1,006 reports in the first four months of the year, compared to 2,055 received during all of last year.
Yunus said that the increase in the number of suspicious financial transactions could be attributed both to an increase in money laundering activities and to an improved rate of reporting by some financial institutions.
Although banks, insurance firms, pension funds, financing firms, investment managers, and currency traders are required to report any suspicious transaction to the agency, some are afraid to do so in cases involving influential figures.
"We actually want to cooperate with the PPATK. But there is no guarantee that our operations will not be disturbed by certain parties if we report cases involving figures who have political connections," said a banker who requested anonymity.
The situation is exacerbated by the fact that the Justice and Human Rights Ministry is dragging its feet in amending the existing anti-money laundering law. The changes were requested by the international community when it dropped Indonesia from the money laundering blacklist.
After four years of pleading by the government, the Paris-based Financial Action Task Force (FATF), the global money laundering watchdog, removed Indonesia from its list of Non-Cooperative Countries and Territories (NCCT) in February 2005.
The watchdog, which was established by the Organization for Economic Cooperation and Development, will continue to monitor the country on a yearly basis to see whether it is following up on several recommendations, including the revision of the money laundering law.
The ministry is supposed to initiate the revision of the law before it is submitted to the House of Representatives for deliberation this year and implementation next year.
"There are so many laws that I have to manage. I cannot recall the progress of the revision (of the money laundering law)," Justice and Human Rights Minister Hamid Awaluddin said.
"I don't think it is necessary to speed up the revision process since there are other laws which are more urgent," Hamid added.
The focus of the planned revision will be on enlarging the role of the PPATK, including giving it the authority to freeze assets. Other provisions would allow more institutions to conduct money laundering investigations, and expand the list of companies required to report to the PPATK.
The National Police are currently the only body authorized to investigate money laundering cases based on evidence from the PPATK. However, their performance has been disappointing, with some of their officials being indicted by the PPATK for alleged involvement in high profile money laundering crimes.
"We are proposing that the government enable the Attorney General's Office and civil servant investigators to pursue money laundering cases as well, in order to limit the monopoly of the police," said Yunus.
The PPATK would also add several kinds of businesses to its list of institutions required to report suspicious financial transactions linked to money laundering and corruption.
Included in the new list would be property companies, automotive dealers, jewelry sellers and legal and accounting firms.
Yunus is concerned that if Indonesia fails to improve its anti-money laundering efforts immediately, it could find itself back on the list of countries categorized as havens for money launderers.
Being put back on the blacklist could result in serious economic consequences for Indonesia. It could jeopardize the overseas acceptance of Indonesian financial transactions, and lead to the imposition of higher risk premiums.
Yunus suggested that foreign creditors and agencies grouped in the Consultative Group on Indonesia (CGI) could push the government to seriously combat money laundering during their upcoming meeting Wednesday.
"Improvement in Indonesia is often triggered by pressure from the international community. If the pressure slows down there is usually no initiative coming from inside the government to keep the effort alive or to make small improvements," he said.