Indonesia prepares terror financing law

New legislation will enable authorities to seize assets and freeze bank accounts.

Indonesia hopes to have a potent new weapon against terrorism this year: a law enabling authorities to freeze bank accounts or seize assets of terrorists and those who finance them.

The law will create the legal mechanisms needed to target terror financing, according to Agus Santoso, deputy chairman of the Financial Transaction Reports and Analysis Centre (PPATK), an independent institution charged with fighting money laundering and other financial crimes.

“We have been working on this regulation for the past three years. We really hope that it will pass by February 2013,” he said, adding that the law is urgently needed.

From January to July 2012, financial service providers reported 191 suspicious financial transactions to PPATK. Analysis of the transactions found that 48 were linked to terrorism financing.

The proposed law is not the result of pressure from other nations, Agus said. “We know for a fact that Indonesia has been threatened with terrorism for many years. Therefore, our need for this law is real,” he said.

Terrorism risk undermines economy

Although the country insists it does not need outside pressure in order to act, experts acknowledge there is a concern about meeting global standards.

“Indonesia is one of two G-20 countries that does not have regulations regarding the funding of terror-related activities,” Santoso said.

On December 12th, Indonesian Finance Minister Agus Martowardojo said the timing is becoming urgent. Without the new statute, international institutions such as the Financial Action Task Force (FATF) could label Indonesia a non-cooperative jurisdiction, he told reporters.

“It needs to be passed soon because FATF will review Indonesia in 2013. We need that law to be able to say that Indonesia has a law to prevent funding for terrorists,”
he said. “If we are downgraded to a non-cooperative jurisdiction, we will be put on the same level as countries unworthy of international financial transactions.”

Being labeled “unworthy” could hurt the country’s economy, the finance minister added.

Militants find innovative ways to obtain funds

Recent incidents underscore the need for updated legislation as extremist cells find sophisticated new ways of drumming up money.

In May 2012, the anti-terror squad Detachment 88 captured 11 individuals suspected of hacking into multilevel marketing websites and stealing some 8 billion rupiah ($835,000). The money allegedly was used to finance terrorist activities such as terrorist trainings in Poso, Central Sulawesi and to produce explosive devices used in churches.

Rizki Gunawan and Cahya Fitriyanta, two of 11 alleged terrorist hackers, are currently on trial in West Jakarta District Court, charged under the 2003 Anti-Terrorism Law and the 2010 Anti-Money Laundering Law.

According to Agus, however, the existing laws do not precisely fit the alleged crimes, demonstrating the need for a new legislation.

In particular, he said, the 2010 Anti-Money Laundering Law “does not specifically regulate the terrorism financing system,” he said, adding that a Counter Terrorism Financing Law would close the gap.

The new law will be strictly implemented and applied to anyone who finances terrorism activity, he stressed.

“The person does not have to be a terrorist. Any individual or organisation that supports terrorist activity will be subject to this law,” he said.

Concerns over implementation

Ordinary citizens told Khabar that the government should also work to make the Indonesian public better aware of the dangers.

Taufan Restu Putra, a 32 year-old Jakarta resident, said he appreciates government efforts to protect Indonesian citizens and the Indonesian financial system with this new law, but he expressed some concern about how it would be implemented.

“What if somehow a terrorist asked me for financial support, but he didn’t tell me the truth that the money will be used to finance terrorist activity? Will I also be charged because I am considered to have supported terrorist activity?” he commented.

“I think the government needs to publicize the regulation properly as soon as it is passed – especially in the remote villages and also the mosques. So that anyone who has a good intention to give to a charity will not be manipulated by terrorists to gain financial support,” he said.