Money laundering still rampant – Editorial

Editorial Board (The Jakarta Post)

Jakarta ●
Tue 8 February 2022

money laundering, due diligence, PPATK, transaction, cash, bribery, conviction, task force, OECD, Indonesian bank, OJK
To free

The Financial Transaction Reports and Analysis Center (PPATK) said it received 73,000 suspicious financial transaction reports in 2021, up from 68,057 in 2020, as well as 2.4 million suspicious cash transaction reports, down from 2.7 million in 2020.

Although the number of cash transactions decreased last year, this trend remains a concern as only single and multiple transactions single-day cash payments that bypass (smurf) the reporting threshold of Rp 500 million (USD 34,720) are classified as suspicious cash transactions. Given advances in electronic payments, this trend confirms that cash remains the means of choice for criminals to launder money domestically, regionally and internationally.

Unfortunately, not even 1% of reported suspicious transactions can be incorporated into criminal money laundering cases, and furthermore, very few of these cases ultimately result in a conviction.

The main reason for the weak enforcement of the Anti-Money Laundering (AML) law is that the PPATK, a type of institution which in other countries is called a financial intelligence agency, has no no power to establish money laundering records for prosecution. The PPATK is only mandated to analyze suspicious transactions and communicate the results of its analyzes to law enforcement agencies: the National Police, the Attorney General’s Office and the Corruption Eradication Commission (KPK) .

It is equally discouraging that these agencies do not have adequate resources and technical skills to develop cases on serious cases of money laundering. What is even more disappointing is that many judges do not have a full understanding of what money laundering really is, with all the complex forms of transactions, even though the legal framework and the fight against money laundering were launched in 2003 under the Money Laundering Act 2002, which was later replaced by Act No 8/2010.

The very few cases that resulted in convictions were corruption cases. This indicates that most judges still believe that money laundering cases must be supported by evidence of predicate offenses which generate the laundered money, whereas under the AML Act of 2010, an offense underlying does not need to be proven. The law states that it is not the prosecutors but the defendants in a money laundering case who are required to prove their innocence by proving that the money or assets involved in financial transactions conform to their financial profiles.

It is imperative that law enforcement agencies strengthen the application of the AML law. Otherwise, the Financial Action Task Force of the Organization for Economic Co-operation and Development, the global anti-money laundering agency headquartered in Paris, could put Indonesia back on its watch list. increased. This classification would place Indonesia among the countries at high risk of money laundering, which would increase the costs of international financial transactions with Indonesia.

As a preventive measure, Bank Indonesia (BI) and the Financial Services Authority (OJK) should ensure that banks and non-bank financial services companies strictly enforce know-your-customer (KYC) guidelines. In addition, in accordance with the AML law, BI should be rigorous in ensuring that suppliers of certain goods and services, such as real estate companies, car dealerships, notaries and auction houses, as well as traders jewellery, precious metals and works of art, conduct rigorous audits and due diligence on customers who engage in large cash transactions.

About Kristopher Harris

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