December 23, 2010

http://www.thejakartaglobe.com/news/money-laundering-fight-hindered-by-the-law-experts/413421

The nation’s Anti-Money Laundering Law rarely manages to catch high-profile suspects due to rampant corruption, a poor understanding of the law itself among its enforcers and the “generic” nature of the measure, legal experts say.

“The law does not provide limitations or specifics in regard to where the ill-gotten money is derived from,” said Andi Hamzah, a law professor at Trisakti University. “Robberies, thefts, prostitution, graft, gambling — in fact, all may be classified under the law.

“This may cause confusion among the police and prosecutors because the Criminal Code already covers those crimes. They just don’t know how and when to use the Anti-Money Laundering Law,” he added.

Widespread graft, Andi said, was also a major obstacle in the implementation of the law, which was enacted in 2002 and adopted from similar statutes in other countries, most notably the United States.

Andi pointed to the ongoing trials of former tax officials Gayus Tambunan and Bahasyim Assifie. Both are accused of stashing billions of rupiah in ill-gotten gains, but prosecutors were unable to deliver cases centered on money laundering.

Gayus was originally named a suspect based on reports from the Financial Transaction Reports and Analysis Center (PPATK), the country’s money laundering watchdog, concerning a suspicious Rp 28 billion ($3.1 million) in his personal bank accounts.

Prosecutors, however, reduced the charge to embezzlement, and Gayus was controversially acquitted in March.

He is now being tried on accusations that he bribed the law-enforcement officials who handled his first case, but again a charge of money laundering was missing in the prosecution’s dossier and indictment.

Criminal law expert Dian Adriawang said the responsibility for proving money laundering lay with law enforcement officials, who had to decide whether crimes fell under the law’s scope before issuing charges based on it.

“Before the money-laundering charge is presented, the original crime must first be identified, whether the money comes from gambling, deception or corruption. And for each of the crimes, the Criminal Code has specified the punishment,” Dian said.

“I suggest that for the law to be effective, police or prosecutors go after graft convicts because their crimes have been clearly defined by the courts so it will be easier for law enforcers to focus on the money laundering charges.”

This month, money laundering convictions were handed down to Bank Century co-owners Hesham al Warraq and Rafat Ali Rizvi, who were accused of looting the bank’s coffers and of fraudulently trading in junk bonds. Both men, each sentenced to 15 years in jail, fled the country late last year and were found guilty in absentia.

In January 2009, the PPATK said that since its establishment in 2003, more than six million suspicious transactions had been reported, but fewer than 1,000 were ever investigated, leading to fewer than 20 convictions.

Few financial institutions bother to comply with the money laundering law’s regulations or report suspicious account activity, according to PPATK spokesman Natsir Kongah.

Only 20 institutions among thousands have complied with the law, he said.

Under the law, institutions or individuals that refuse to comply with the regulations can be charged with abetting money laundering. The crime carries a maximum sentence of five years in prison and a Rp 1 billion fine.