With its efforts to combat money laundering becoming increasingly feeble, Indonesia faces the risk of being internationally blacklisted again as a haven for dirty money and a high-risk country for international financial institutions.
Indeed, the fact that not a single person has been brought to court on charges of money laundering is a truly dismal record for Indonesia, whose government is perceived as one of the most corrupt in the world and where large cash transactions are still the rule rather than the exception.
It is high time to remind the government of the urgency of the issue. Indonesia cannot sit back and relax because it was removed by the Financial Action Task Force – the global money laundering watchdog – from its list of non-cooperative countries and territories in February 2005. The country could be put back on the blacklist, which would sharply increase transaction costs for Indonesian companies overseas.
It has indeed been four frustrating years for the Financial Transaction and Report Analysis Center (PPATK) – the Indonesian financial intelligence unit – which was set up to implement the 2002 law on money laundering. The center has virtually been fighting single-handedly against money launderers, without adequate support from law enforcement bodies such as the National Police and Attorney General's Office.
The problem is that the PPATK is authorized only to analyze reports of suspicious transactions from financial institutions, and to submit money laundering cases to the police for further investigation and prosecution.
So far, the center has received almost 5,000 reports of suspicious financial transactions. Strong evidence was gathered in 450 of these cases and forwarded to law enforcement bodies for further investigation and prosecution. But not a single case has reached the courts.
The financial intelligence unit is so frustrated with the lack of cooperation from the National Police that the center's chairman, Junus Husen, dropped a "bomb" last August, disclosing that there were strong indications of money laundering involving hundreds of billions of rupiah related to the personal accounts of 15 noncommissioned officers and generals in the National Police.
We believe in the credibility of the PPATK report because its legal and financial experts only forward to the National Police those cases with strong indications of money laundering.
The fact that not a single case has reached the courts almost one year since Husen forwarded the report to the police is just further evidence of the non-cooperative attitude – or even resistance – on the part of law enforcement bodies, and the acute lack of political leadership on the part of President Susilo Bambang Yudhoyono to intervene in such an important area of law enforcement.
The mentality of corruption within law enforcement agencies such as the National Police, rather than inadequate technical competence to investigate complex financial transactions, is mainly responsible for the miserably weak enforcement of the law on money laundering. Cooperation between law enforcement agencies and financial service companies and other government institutions, such as the customs and tax services and the stock market watchdog, is vital for the effective enforcement of the money laundering law. Information sharing is the brain of the drive against money laundering.
True, money laundering was a completely new concept within Indonesian financial systems when the anti-money laundering campaign was launched in early 2002. But over the past four years, we believe, the National Police and Attorney General's Office should have trained an adequate number of personnel to build up strong money laundering cases using the evidence forwarded by the PPATK.
We also get the impression that there is a lack of national ownership of the law against money laundering because the legislation was hastily enacted under strong pressure from the United States, which wanted the world to crack down on the flow of money to international terrorists after the attacks of Sept. 11, 2001.
However, despite the initial focus on stopping the flow of money to terrorists, fighting money laundering is an important component of Indonesia's battle against corruption, tax evasion and numerous other crimes. Because the crimes covered by the money laundering legislation are so diverse, the fight will hit almost all major sources of dirty money, including corruption, drug trafficking, smuggling, bribery, banking crimes, drug crimes, terrorism and human trafficking.
An effective anti-money laundering campaign will make it extremely difficult for those involved in corruption, tax evaders and other big criminals to bring their ill-gotten money into the legal financial system.
Certainly, amending the law on money laundering to give the PPATK more teeth could go a long way toward strengthening this campaign. But a strong order from President Yudhoyono to the National Police and the Attorney General's Office to fully cooperate with the PPATK would be adequate for now to bolster the anti-money laundering efforts without having to wait for the long process of amending the law.