Indonesia passes new law to curb terror finance

The new legislation will help authorities crack down on those who raise funds for extremist activities.

By Aditya Surya for Khabar Southeast Asia in Jakarta

February 20, 2013
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Experts say cutting terrorism funding is one way to stop the mushrooming of terrorism in Indonesia. Now, Indonesia has the legal tools to do so.

  • Minister of Law and Human Rights Amir Syamsudin (front, second from left) addresses the legislative committee tasked with drafting Indonesia's new law on terrorism financing on February 11th. The bill was passed into law by the House of Representatives the following day. [Okky D.Feliantiar/Khabar].

    Minister of Law and Human Rights Amir Syamsudin (front, second from left) addresses the legislative committee tasked with drafting Indonesia's new law on terrorism financing on February 11th. The bill was passed into law by the House of Representatives the following day. [Okky D.Feliantiar/Khabar].

After preparing it for a year, the House of Representatives (DPR) passed Indonesia's new Law on the Prevention and Eradication of Criminal Acts of Terrorism Funding in a plenary session on February 12th.

Ansyaad Mbai, head of the National Counterterrorism Agency (BNPT), welcomed the new law as an important addition to his arsenal of terror-fighting tools.

"Security forces have been struggling to close the funding flows to terrorist networks in Indonesia. In the past, we had no laws to stop the collection of funds, to prevent the financing of any terrorism acts," he told Khabar Southeast Asia in a phone interview.

"The law will strengthen our efforts to combat terrorism nationally and at the international level," Minister of Justice and Human Rights Amir Syamsudin said during the February 12th legislative session.

Stiff sentences and reporting obligations

Under the new law, people convicted of financing terrorism can be sentenced to life in prison, and companies found guilty of the same can be slapped with fines up to 100 billion rupiah ($10.3m) and seizure of assets, according to multiple media reports.

The law also sets in place a mechanism for reporting and investigating suspicious financial activities and the freezing of assets. Financial service providers must report suspicious activity to the Financial Transaction Reports and Analysis Center (PPATK), an independent institution charged with fighting money laundering and other financial crimes.

PPATK validates and passes that information on to the police, who in turn must submit it to Jakarta's High Court. Based on this chain of reporting, the court makes the final ruling as to whether evidence supports seizure of assets and freezing of accounts.

"The Indonesian court will have 30 days to review and decide whether to block the accounts," Basuki Rahmat, an official with the National Mandate Party (PAN), explained to Khabar.

"Our need for this law is real"

Passage of the legislation will help close a gap in Indonesia's international commitments. Until now, Indonesia was one of only two G-20 countries that lacked regulations on terrorism financing.

Officials, however, say it was not international pressure which prompted the new law, but the actual spectre of terrorism which the country continues to face.

"We know for a fact that Indonesia has been threatened with terrorism for many years. Therefore, our need for this law is real," Agus Santoso, deputy chairman of PPATK, told Khabar.

Indonesia moved from 38th to 29th position in the latest edition of the Global Terrorism Index (GTI), which ranks countries annually based on the number of terrorist attacks they experience and the resulting fatalities, injuries and property damage.

According to lawmaker Adang Daradjatun, who headed the special committee on the bill, several key players in Indonesia's counterterrorism effort gave input into the legislation.

"The bill was designed by several ministries including Law and Human Rights, Finance, and Foreign Ministry as well as the National Police and PPATK. They are on the frontline in the fight against terrorism," he said.

Responding to critics who say the new law could be abused, Daradjatun insisted the authorities are committed to making sure it is applied correctly. "We should not be afraid because the government will keep an eye on its implementation," he told Khabar.

Expert: Terrorists skilled at drumming up funds

Reacting to passage of the new law, terrorism expert Al Chaidar of Malikussaleh University in Aceh told Khabar via telephone that gray areas are finally being cleared up.

"Now we have clear procedures and mechanisms related to the prevention and combating of the financing of terrorism. It should be made as detailed as possible," he said.

However, he noted, terrorist have been avoiding transactions through the banking system for years, and turning to illegal activities such as kidnapping, piracy, and exchange of food for weapons.

Recent incidents underscore extremist cells' sophisticated new ways of drumming up money.

In May 2012, anti-terror squad Detachment 88 captured 11 individuals suspected of hacking into multilevel marketing websites and stealing some 8 billion rupiah ($835,000).

One of them, Cahya Fitriyanta, was sentenced to eight years in prison and a 500m rupiah ($51,000) fine on February 6th, after being found guilty of stealing funds and funnelling them to terrorist activity in Poso, Sulawesi, according to The Jakarta Globe.

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