AML Regime

Posted on Juli 6, 2007. Filed under: Artikel |

foto-yunus-husein.jpg Yunus Husein

 

INDONESIA’s ANTI-MONEY LAUNDERING  (AML) REGIME 

~ THE PROGRESS 

Presented  By Mr. Yunus HuseinHead of Indonesian Transaction Report and Analysis Centre (INTRAC) Radisson Wilshire Hotel. Los Angeles, Tuesday. October 11. 2005

Firstly I would like to take this opportunity to thanks to Consul General of The Republic Indonesia in LA. His Excellency Handriyo Kusumo Priyo for arranging this Seminar, and also for Indonesia Trade Promotion Centre (ITPC), BKPM and Los Angeles-Jakarta Sister City (LAJA).

It is the first of a series of seminars held by the Indonesian Embassy in Washington DC, and the office of the Executive Directors of The South East Asia Group for The World Bank, scheduled to take place within the next three days.

It’s a pleasure to be here to speak to you this morning. I have three related topics that I’d like to cover today. They include: the topic of PPATK, the Progress of AML Regime, PPATK’s measures toward the AML Regime and conclusion. 

PPATK-INTRAC

Ladies and Gentlemen.

Inclusion of Indonesia in the list of Non-Cooperative Countries and Territories (NCCTs) since June 2001 has pushed the Government of Indonesia to take serious measures in a relatively very short timeframe, directed particularly to remedying weaknesses identified by the Financial Action Task Force on Money Laundering (FATF). Since 1999, Indonesia has been diligently working toward establishing an effective anti-money laundering regime. This effort culminated in the passage of Law Number 15 Year 2002 in April 2002. Law Number 15 Year 2002 for the first time criminalized money laundering, established the Indonesian Financial Transaction Reports and Analysis Center (known by its Indonesian acronym “PPATK”) as the financial intelligence unit, required “Providers of Financial Services” to report suspicious financial transactions and cash transactions equivalent to and larger than Rp. 500 million and established the “Know Your Customer” (KYC) principle.

In response to input from the Financial Action Task Force, Indonesia fast-tracked an amendment to Law Number 15 Year 2002 through Parliament which was passed in October 2003. The amendment, Law Number 25 Year 2003, broadened the definition of “STR” to include any transaction related proceed of crime, enhanced international cooperation and included an anti-tipping off provision. October 2003 was also the first month that the PPATK became fully operational and began receiving reports from “Providers of Financial Services.” As of the end of January 2004, the PPATK has acted on 71 Suspicious Transaction Reports (STR). At the same time, the PPATK is working to develop itself into a world-class FIU. With the assistance of the international community, the PPATK has launched an ambitious program to hire and train personnel and to develop its capability to analyze data through the installation and effective utilization of computers and other technology. On the regulatory front, the PPATK has issued five regulations which provide guidelines on preventing money laundering, identifying suspicious transactions, and reporting on suspicious transactions. The PPATK has also actively sought to cooperation from other domestic regulators and law enforcement agencies. The PPATK has entered into six memorandums of understanding to insure the exchange of information, particularly financial intelligence between the PPATK and domestic agencies.

PPATK has also been open to international cooperation and has entered into agreements concerning the sharing of financial intelligence with FIUs in Thailand, Malaysia, Korea, Australia and Hong Kong.

Other domestic regulators have been equally active in establishing Indonesia’s anti-money laundering regime. Bank Indonesia, the central bank, has issued nine regulations covering such areas as: KYC principles for banks; fit and proper tests for bank management; and, regulations concerning the source of capital. Non-bank financial institutions are regulated by the Directorate General of Financial Institutions (DGFI) within the Ministry of Finance. The DGFI has recently issued KYC regulations for the insurance industry, pension funds and other non-bank financial institutions. The Capital Markets Supervisory Agency (BAPEPAM) has issued eleven related regulations and has already conducted compliance audits at securities and exchange firms. 

The Progress

A series of actions taken by PPATK and other regulatory agencies with respect to AML compliance has concluded a continuously positive result. As a result of the actions of PPATK, other financial sector regulators, and other Government of Indonesia (GOI) agencies, the number of Financial Services Providers (FSPs) reporting Suspicious Transaction Reports (STRs) to PPATK has increased significantly as presented in following figure: As of September 2005, PPATK has received 2,734 STRs (2,691 STRs from 97 commercial banks and 1 rural, and 43 STRs from 23 nonbank financial institutions). As of September 2005 we have received 1,408.216 CTRs. This number is impressive since it commenced in April 2004. The excellent progress in reporting is due to the aggressive compliance efforts underway. As PPATK and the primary regulators continue aggressive socialization efforts, all financial institutions have increasing awareness of their new responsibilities. See table.

tabel-1.jpg

The statistics in another required report, the Cross Border Cash Carrying report, has also been increasing significantly. As previously reported, after the Decree of Director General of Customs and Excise No.01/BC/2005 concerning the Reporting Procedure of Cross Border Cash Carrying was launched by 19 January 2005 in following the Ministry of Finance Regulation No 624/PMK.04/2004 dated 31 December 2004, 110 Forms BC 3.2 have been filed by 2 May 2005. As of 39 September 2005, 464 Forms BC 3.2 have been filed with Customs and submitted to PPATK, which are derived from three (3) custom areas, namely Jakarta Cengkareng, Batam and Tanjung Balai Karimun. It indicates more than 200 Forms BC 3.2 have been filed during May 2005 to August 2005 or 50 reports per month. 

tabel-2.jpg

The Efforts

There have now been a total of 355 cases referred by PPATK to the Police and the AGO as of 30 September 2005. Since PPATK has been making these referrals, there has been one successful prosecution involving terrorism, 19 successful prosecutions involving bank fraud and/or corruption and 2 successful prosecutions for money laundering offence. Each of these prosecutions was based on the referral of an STR and related information by PPATK, and involved money laundering activities, with conviction on the predicate crimes.

tabel-3.jpg

Sentences in these cases range from 4 months in prison, to the death sentence. Fifteen of the twenty one cases had sentences imposed of 8 years in prison or more, including money laundering case.

Additionally, there are presently thirty (30) cases that are in the prosecution process. Seven of these cases relate to corruption and money laundering, twelve relate to bank 3364 INVESTIGATOR ATTORNEY fraud and money laundering, and eleven cases relate to money laundering offenses only.

To support the successful investigation and prosecution for money laundering offence, both Indonesian National Police (INP) and Attorney General’s Office are currently in the process of special unit or task force formation.

The Criminal Investigation Division within INP is developing the formation of a Money Laundering Unit, which is specialized to investigate money laundering offence only. Recently the investigation of money laundering offence is performed by Banking and Money Laundering Unit of the INP. It is expected the special unit will be successfully established during this year. Additionally, the Attorney General’s Office is now in the final step to establish Special Task Force on Terrorism and Transnational Organized Crimes, which money laundering is one of those crimes. It is supposed the Attorney General would formalize the establishment of the Special Task Force by the end of September 2005. The task force shall be designed to integrate the prosecution process of money cases around Indonesia.

Based on these efforts, it is likely that successful money laundering prosecutions resulting in conviction on the money laundering charge will more result in Indonesia in the near future.

It is worth to note that PPATK is a member of other organized global anti-money laundering organizations such as EGMONT Group.

Further Indonesia is member of the Asian Pacific Group on money laundering (APG), number of efforts are being made to ensure that Indonesia is not lagging behind. In Indonesia, we have also National Coordination Committee (NCC) on Anti- Money Laundering which consists of ministerial level chaired by Coordinating Minister for Political, Legal and Security Affairs. The Committee has indeed recognized the need to combat money laundering and essential for ensuring that the Indonesian government must react to money laundering as a global problem. In addition, various interagency cooperation in local and international community (such as MoU between PPATK and Indonesian Central Bank, Indonesian Capital Market Authority, KPK and MoU with 10 foreign FIU) have been made by PPATK which we believe is critical to the success and in advancing the cause for the fight against money laundering. PPATK anticipates signing MoU with Fintrac Canada in the near future. PPATK is also pleased to exchange information with foreign counterparts under the premise of equality and reciprocity.

In relation with the cooperation between KPK and PPATK, both agencies had shares information to assist individual mission. For instance, KPK has made 64 inquiries to PPATK regarding Corruption suspect and their asset. In response, PPATK has followed the inquiries by analyzing these suspected accounts. PPATK so far has responded 50 inquiries from KPK. Conversely, PPATK has sent KPK 8 spontaneous investigative lead regarding corruption suspect identified by PPATK. Finally, PPATK has also made 1 inquiry to KPK and KPK has answered to this inquiry.

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As of 31 August 2005, PPATK has identified at least 72 cases of cooperation involving financial intelligence with other countries since 2003, including U.S., Singapore, Australia, Cook Island, United Arab Emirates, Hong Kong, Philippines, Switzerland, Malaysia, Belgium, Thailand, Mauritius, Lebanon, British Virgin Island, Taiwan, P.R. China, and others. This is an increase from 52 cases identified at the time of the submission report in May 2005. 

Conclusion

As you can see, we have witness some development on the anti money laundering movement in Indonesia. PPATK has been hard at work implementing the AML Law. Some of these initiatives are in response to very recent events and are on a fast track, making this a particularly challenging time for us. But we are committed to meeting this challenge. Our response to the current challenge will be grounded in the same bedrock principle that guides all our initiatives: our commitment to the financial industry protection. At this time, as always, we will chart and follow an extensive socialization designed to result in better reporting participation and better practices, all in the service of the safe financial interests. We hope we can count on your best efforts to this end as well.

Thank you for your time and attention. To each and every one of you I wish you all peace and prosperously during this Ramadhan season.* 

Los Angeles, Tuesday. October 11. 2005

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