Forbidden Funds - Indonesia's New Legislation for Countering the Financing of Terrorism
In March 2013 the Indonesian Parliament passed the Prevention and Eradication of Terrorism Financing Act (Law No.9 2013). Enactment of the legislation ostensibly brought Indonesia into line with its commitments under international law as a signatory to the International Convention for the Suppression of Financing of Terrorism (1999) which Indonesia signed in September 2001 and ratified in 2006. While Indonesia's existing, hastily-drafted anti-terrorism legislation (Law No. 15 2003) contained a brief provision criminalising the funding of terrorism, this latest and much more significant statute is intended to shore up any gaps within the legislative regime already in place. It also provides for a central governmental agency, namely the Centre for Financial Transactions and Reporting (PPATK - Pusat Pelaporan Analisis Transaksi Keuangan), to have both authority and responsibility for the monitoring of suspicious financial transactions. While the legislation establishes the legal basis for PPAATK's role in countering the financing of terrorism, it also places significant obligations on financial services providers to monitor and report any suspicious transactions to PPATK - as well as obligations to "know your customer" - with significantly penalty provisions for failure to do so. However, despite the enactment of this latest legislation to counter the funding of terrorism, the Financial Action Force (FATF), an inter-governmental standard-setting agency under the auspices of the Organization for Economic Co-operation and Development (OECD), has kept Indonesia on its list of 'high risk and non-cooperative jurisdictions'. This paper examines the international law bcakground to the new counter-terrorism financing legislation, the substantive sections of the Act, and the obligations it palces on commercial financial services providers. It also examines the legislative regime's deficiencies and criticisms.
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