Jun.09, 2010, 9:59 AM, Source: The Jakarta Post

National Police chief of detectives Comr. Gen. Ito Sumardi’s clarification last week that the Rp 95 billion (US$10.35 million) in bank accounts reportedly owned by Police Insp. Gen. Budi Gunawan had been cleared as legitimate wealth, built up over the years from a business run by him and his family, left a lot of big, troubling questions.

What about the regulation that bans senior police and military officers from operating businesses? Have tax officials audited Gunawan’s businesses and have he and his family paid the appropriate income tax?

 Gunawan, formerly chief of the Jambi provincial police and now the head of the police internal affairs division, was one of 10 police officers whose bank accounts were suspected by the PPATK (Financial Transaction Reports and Analysis Centre, or the financial intelligence unit) of involvement in suspicious transactions, as defined by the money laundering law.

The PPATK found through its surveillance that Gunawan, whose monthly official pay ranged between Rp 4 million and Rp 6 million, together with his son conducted suspicious transactions between 2005 and 2008, whereby several businesspeople frequently transferred money to their bank accounts.

Another big question is what type of business was Gunawan and his son engaged in that could have generated such huge profits. If their businesses were so profitable, have they paid the proper taxes on those earnings?

Since Gen. Sumardi did not mention anything at all about clearance from the tax office, we greatly doubt the $10.35 million sitting in Gunawan’s bank accounts has derived from legitimate businesses.

The ease with which the reports on suspicious transactions involving the bank accounts of police officers have been resolved, only heightens our concern that the anti-money laundering institution, like the Corruption Eradication Commission, is being crippled.

PPATK chief Junus Husein announced in August 2005, after a meeting with then National Police chief Gen. Sutanto, that his office had found indications of money laundering involving hundreds of billions of rupiah related to the bank accounts of 15 police officers.

However, nothing came from the reports given by the PPATK to the National Police though the dossiers were made based on thorough analyses by lawyers, police officers and financial experts working with the financial intelligence unit.

What a frustrating job for the financial intelligence unit, which was set up in 2002 based on the money laundering law.

What, then, is the use of the politically independent financial intelligence unit if most of its well-researched and analyzed reports on suspicious transactions can be so easily turned down by the police?

The problem is that the financial intelligence unit is mandated only to compile and report indications of money laundering to the National Police, who are then responsible for conducting further investigations for eventual prosecution.

An effective enforcement of this law could have helped the national campaign against corruption and other crimes, such as drug trafficking and illegal logging, because those whose bank accounts were found by the financial intelligence unit to be involved in suspicious transactions are required by law to prove, with legal evidence, that the money in their accounts was derived through legitimate means.

There is another reason as to why government must act firmly to strengthen the financial intelligence unit in enforcing the money laundering law. A withered anti-money laundering drive could again prompt the Financial Action Task Force (FATF) of developed countries to put Indonesia back onto its blacklist of high-risk countries for financial transactions.