Eko Adityo Nugroho | February 26, 2012

http://www.thejakartaglobe.com/business/ppatk-to-monitor-property-buys-for-money-laundering/500694

Starting next month, property developers will be required to report purchases of residential property with a price tag above Rp 500 million ($55,000) to the country’s money-laundering watchdog.

The requirement is stipulated in the 2010 Anti-Money Laundering Law. The watchdog, the Financial Transaction Reports and Analysis Center (PPATK), will issue the technical guidelines that will determine how this initiative is carried out.

“This applies to all cash transactions. If the purchase is made through installments, then the bank will report it to the PPATK,” Muhammad Yunus, the chairman of the watchdog, said recently.

Strong domestic demand and improving investor confidence following a series of credit rating upgrades are expected to help the nation’s property sector continue to flourish.

Many wealthy residents buy multiple properties for investment purposes, but there are also some officials who launder money by buying property.

One example is Gayus Tambunan, a low-ranking tax official who was convicted of receiving graft money and bribing state officials. He owned a luxurious property in an upscale residential complex in North Jakarta. The police seized the house, among other assets.

Yunus said the initiative would give property developers protection against accusations they were profiting from graft money. He said developers would be asked to collect information from clients purchasing property priced at more than Rp 500 million.

That is about the cost of a one-bedroom condominiums in Central Jakarta.

Through the information from the buyers’ profiles, the PPATK would be able to trace suspicious transactions, Yunus said. He added that if someone refused to provide the information then the sale would be canceled.

The chairman of Real Estate Indonesia, Setyo Maharso, gave a cautious welcome to the new requirements. “In principle, we understand the government’s intention and support it,” he said.

He urged the PPATK to issue the guidelines quickly so the REI could familiarize property developers with the new regulation.

Lucy Rumantir, chairwoman of Jones Lang LaSalle-Procon, a real estate services firm, was not worried the requirement would harm luxurious residential property sales.

She said in every property transaction the source of the money had to be clear because it had to go through a notary, where details on the buyer and seller had to be spelled out.

Transactions in the property sector rose 24.7 percent to Rp 301.3 trillion last year, data from the central bank showed. The figure was Rp 249.7 trillion in 2010.