JAKARTA (Reuters) - Indonesia’s government has proposed a law to parliament to limit cash transactions to curb bribery and money laundering in Southeast Asia’s biggest economy, the head of the country’s anti-money laundering watchdog said on Wednesday.
The draft bill, which limits any cash payments to a maximum 100 million rupiah ($7,260), will be assigned as a legislative priority for 2018, said Ki Agus Badaruddin, head of the Financial Transaction Reports and Analysis Centre (PPATK), adding that he hoped the bill can be approved later this year.
“Basically, the assumption is this restriction will reduce the space in which one can commit acts of money laundering and terrorism financing,” said Badaruddin.
No details were given on how such a law could be enforced.
Some 85 percent of transactions in Indonesia are in cash and are harder to track that those done through banks or other electronic channels, making it a challenge for the government to fight money laundering, corruption and terrorism financing.
Badaruddin was quoted by media as saying the PPATK had detected an increase in bribery with most transactions in cash.
PPATK had found more than a thousand suspicious cash transactions that could be related to the upcoming regional elections across Indonesia, versus 53 suspicious transactions done electronically, Tempo.co reported.
Indonesia is set to hold elections for mayors and governors in June. Next year, the world’s fourth most populous country is going to have parliamentary and presidential elections.
Indonesians have to contend with high levels of graft in many areas of their life and money politics during elections is often rife despite efforts by the country’s independent anti-corruption eradication agency.
Indonesia placed 96th out of 180 countries in Transparency annual corruption perceptions index last year, on par with Colombia and Thailand.
Indonesia’s central bank, which was involved in drafting the bill, thinks the proposed limit could improve law enforcement, Bank Indonesia governor Agus Martowardojo said.
“For us who is in charge of payment system, cash transaction is fine, but non cash is more efficient,” Martowardojo said, adding that the plan also supports BI’s campaign of getting more people to transact electronically.
($1 = 13,773.0000 rupiah)
Reporting by Maikel JefriandoWriting by Gayatri Suroyo; Editing by Ed Davies and Kim Coghill