In Indonesia, the occurrence and revelation of money laundering cases over the decade are uncountable. The public can easily learned from the cases coverage in various medias circulating in the society. In this article, I am not going to discuss about money laundering cases in Indonesia, however I will start my discussion by elaborating what is money laundering and what are the prevailing legal basis for money laundering in Indonesia.
Money Laundering Legal Basis
Currently, the prevailing legal basis for money laundering is Law Number 8 Year 2010 concerning Countermeasure and Eradiction of Money Laundering (Law 8/2010), which replaces the initial law money laundering, i.e. Law Number 15 Year 2002 (Law 15/2002) as amended by Law Number 25 Year 2003 (Law 25/2003)
Definition and Stages
In his Criminology literature, Hagan (2013) stated that money laundering refers to the activity of cleansing or washing “dirty money” (illegal funds). From this literal and simple definition, we conclude that the basic principle of money laundering activity is conversion of something from its dirty state into a clean state, from illegal state into legal state. While, referring to Law 8/2010, money laundering is defined as activities: placing, transferring, assigning, spending, paying, granting, entrust, bringing out of the country, transforming, converting with currency or securities or any other action toward assets which known or should be suspected proceeds of crime with the purpose of concealing or disguising the origin of the assets (Article 3); concealing or disguising the origin,source, location, designation, transfer of rights, or actual ownership of assets which is known or should be suspected as proceeds of crime (Article 4); and receive, controlling the placement, transferring, payment, grants, donation, enstrusting, conversion, or using assets which known or should suspected proceeds of crime (Article 5).
Fromthe aforementioned definition provided by Law 8/2010, Indonesian Financial Transaction Reports and Analysis Centre (INTRAC)inits E-Learning (2014)categorizedmoney laundering perpetrators into 2 classifications: active and passive perpetrators. Active perpetrator,whoqualifies Article 3 and Article 4 of Law8/2010, in which the money laundering perpetratorisaltogether acting as the predicate crimes perpetratorand the partywho knows or should suspect that the estates derived from the proceeds of crime.Passive perpetrator,whoqualifies Article 5 of Law8/2010, in which money laundering perpetratoris the partywho benefited from the proceeds of crime and participate in concealing or disguisingthe origin of the estates.
Hagan (2013) also describes three stages in money laundering, which includes:
Moreover the INTRAC (2011) define, placementas phaseof placingthe moneythat derived from a criminal activity,for example by splitting a large amount of cash into an inconspicuous small amount to be placed in the financial system,either by using a bank saving account, or using it to purchasefinancial instruments (such as checkor giro) which will be charged and subsequently deposited in a bank account situated in another location.Placementcan also be done with the physical movement of money, either through smuggling of cash money from one country to another, and combine the cash money originated from proceeds of crime with money derived from legitimate activities.Layering is defined as separating the proceeds of crime from its source which are related to criminal activities through several stages of financial transactions, whichin this respect involving the process of movingthe fund from multiple accounts or specific location as the placementto another location through a series of complex transactions designed to disguise/conceal the source of “illegal” money. Integration is an attempt to establish a foundation as a “legitimate explanation” for the proceeds of crime. Herethe money which are being“washed”throughplacementand layering are transferred through official activities that seem unrelated at all with the predicate criminal activitywhich is the source of the money being “laundered”. At this stage the money that has been laundered disposed back into the circulation with a form complies with the prevailing laws.
Predicate Crimes of Money Laundering
Article 2 of Law 8/2010 using “proceeds of crime” element, while Hagan (2013) using the term “dirty money” in the definition of money laundering. Both definitions provide the similar description about how the money earned was derived from criminal activities (Illegal)—then the money is processed through money laundering, intended to be legal. What kind of crime can be a source of funds formoney laundering? In other words, what criminal activities considered as the predicate crimes of a money laundering?
Referring to Article 2 of Law No. 8/2010, crimes which can be categorized as predicate crimes of money laundering includescorruption, bribery, narcotics, psychotropic substances, smuggling of labor, migrant smuggling, in banking, in capital market, ininsurance, customs, excise, human trafficking, illicit weapon trade, terrorism, kidnapping, theft,fraud, deception, forgery,gambling, prostitution, in taxation, in forestry, in environmental, in marine and fisheries, or any other criminal that punishable by 4 years imprisonment or more.
Hagan, Frank E. (2013). Introduction to Criminology: Theories, Methods, and Criminal Behavior (8th ed.). Los Angeles: Sage Publications.
Republic of Indonesia. (2010). The Law Number 8 Year 2010 considering Countermeasure dan Eradication of Money Laundering.
Indonesian Financial Transaction Reports and Analysis Centre – INTRAC. (2011). Standar Ketentuan Internal tentang Pelaksanaan Prinsip Mengenali Pengguna Jasa Bagi Penyedia Barang dan/atau Jasa Lainnya. 23 Oktober, 2014. http://www.ppatk.go.id/app/webroot/ckimages/Pelaporan/PBJ/Pedoman_Pelaksanaan_PMPJ_PBJ.doc
Indonesian Financial Transaction Reports and Analysis Centre – INTRAC E-Learning. (2014). Pengenalan Anti Pencucian Uang dan Pendanaan Terorisme, Bagian 4: Pengaturan Pencegahan dan Pemberantasan Pencucian Uang di Indonesia. 28 Oktober, 2014. http://elearning.ppatk.go.id/pluginfile.php/45/course/section/29/Mod%201%20%20Bag%204%20-%20Pengaturan%20Pencegahan.pdf