The government's lack of political will and effort is to blame for Indonesia's failure to curb money laundering according to the head of the Financial Transaction and Report Analysis Centre (PPATK), the organisation formed under the country's anti-money laundering law.

To restore the country's reputation in international circles, Yunus Husein says the authorities should move quickly to resolve money-laundering cases such as the Bank Negara Indonesia (BNI) letter of credit (L/C) scandal (DC World News, 20 November 2003).

If Indonesia does not clean its act up, the financial sector could become subject to several international sanctions that could impact negatively on Indonesian banks' ability to conduct L/C business.

Uncooperative country list

Indonesia is listed an uncooperative country by the Financial Action Task Force (FATF), the international organisation set up to coordinate the global campaign against money laundering.

"Indonesia is still on the [FATF] list," says Yunus. "If the government were to act quickly to resolve money-laundering cases, such as the BNI case, we would have some success stories that we could sell," he told a parliamentary finance commission discussing the BNI case.

The BNI scandal was one of the matters discussed during the FATF regional meeting in Korea from 14-18 June 2004 according to Yunus.

Sanctions

Possible sanctions that could be imposed on Indonesia if it fails to meet FATF standards include the imposition of premium charges on transactions with foreign companies, restrictions on correspondent banking arrangements between Indonesian banks and their counterparts in FATF countries and the rejection of Indonesian L/Cs.

Several bank officials were allegedly involved in the BNI scandal in which local firms claimed to be exporting commodities to Africa. Documents used to obtain L/Cs turned out to be fakes.

Investigations

None of the suspects in the BNI scandal has yet been punished while prime suspect, Maria Pauline Lumowa, has fled Indonesia.

Yunus said PPATK has received suspicious transaction reports related to BNI's missing money, some of which had been transferred overseas. He urged those probing the case to speed up their investigations and cooperate with the authorities in those countries where illicitly gained cash from the BNI scandal has finished up.

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