Various crimes committed both by individuals as well as corporations within the territory of a country or across the borders of another country are increasing. Such crimes include among other things the criminal acts of corruption, bribery, smuggling, smuggling of manpower, smuggling of immigrants, banking, illegal trafficking of narcotics and psychotropic, slavery, white slavery, child slavery, illegal trading in arms, kidnapping, terrorism, theft, embezzlement, fraud and various white collar crimes. The aforementioned crimes involve or produce extremely large amounts of assets.
Assets derived from various such crimes or criminal acts are generally not spent or used directly by the perpetrators because if they do so such assets can be easily traced by law enforcement agencies. Perpetrators usually try to bring such assets derived from such criminal acts into the financial system first, especially into the banking system. Hence, they expect that law enforcement agencies will be unable to trace the origins of such assets. Attempts to hide or conceal the origins of assets derived from criminal acts as intended in this Law are known as money laundering.
For criminal organizations, assets derived from crime are like blood in a body, meaning to say that if the flow of assets through the international banking system is cut off, the criminal organization concerned will weaken, its activities will
decline, and it can even cease to exist. Therefore, assets are an extremely important part of a criminal organization. That is why there is an urgent need for criminal organizations to conduct money laundering so that the origins of such
badly needed assets are difficult or impossible to trace by law enforcement agencies.
In addition to being extremely harmful for society, money laundering acts also inflict losses on the state because they can impact or disrupt national economic stability or state finances along with the increase of various crimes.
In the above context, endeavors for the prevention and eradication of money laundering practices have drawn attention internationally. Various countries have been undertaking various measures for the prevention and eradication of money laundering practices by engaging in international cooperation, both through bilateral as well as multilateral fora.
The enactment of the Law concerning Money Laundering Criminal Acts in the context of national interest is a reassurance that the Government and private sector are not part of the problem, but are part of the solution, in the economic, financial and banking sectors.
The first step a country must make for the prevention and eradication of money laundering practices is the formulation of a law prohibiting money laundering practices and imposing heavy punishment on enactors of such crime. It is expected that with the enactment of this law money laundering criminal acts can be prevented or eradicated, among other things by criminalizing all acts in every phase of money laundering process consisting of:
- placement, namely attempting to place cash derived from criminal acts into the financial system or attempting to re-place cheque, bank draft, deposit certificate and others into the financial system, especially the banking system.
- transfer (layering) namely attempting to transfer assets derived from criminal acts (dirty money) placed successfully at the Provider of Financial Services (especially banks) as proceeds from attempted placement with another Provider of Financial Services. By conducting layering, it is difficult for law enforcement agencies to trace the origins of such assets.
- using assets (integration) namely attempting to use assets derived from criminal acts brought into the financial system successfully through placement or transfer as if it were clean money, for clean business purposes or for re-financing criminal activities.
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Indonesia-Law on Crime of Money Laundering-Elucidation-2002-eng (full text in English, PDF)
complete text of the Act: Indonesia-Law on Crime of Money Laundering-2002-eng
