Securities watchdog to speed up deal on fraud prevention

Aditya Suharmoko , The Jakarta Post , Jakarta | Mon, 03/03/2008 12:52 AM | Business

To combat cross-border fraud, the capital markets regulatory agency wants to speed up the ratification of a multilateral capital markets agreement.

Chairman of the Indonesian Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) Fuad Rahmany said Indonesia risked being left behind it if didn't ratify the agreement by 2010.

Ratification would put the country on the fast track for cooperation with other countries in fighting sophisticated crimes such as securities fraud which sometimes involve more than one jurisdiction.

"International securities agencies won't help us go after cross-border fraud unless we ratify it. That's why we need to speed things up," Fuad said recently.

The agreement in question is a multilateral memorandum of understanding (MMOU) put forward by the International Organization of Securities Commissions (IOSCO) in 2002.

IOSCO is an umbrella organization of watchdog bodies that counts 90 percent of the world's securities and futures regulatory agencies among its 177 members.

Members who have ratified the agreement cooperate to discourage transnational financial crime by sharing information about securities violations and fraud.

Pursuant to the agreement, members can also obtain access to information and documents regarding bank transactions and brokerage accounts from other countries.

"The MMOU stipulates that all IOSCO members are expected to be ready (by 2010) to provide each other with mutual assistance and exchange of information."

The MMOU, he added, also encouraged regulatory agencies worldwide to identify and tackle legislative, regulatory and institutional obstacles hampering their ability to share information during cross-border fraud investigations.

"Therefore, we have to review our regulations and laws first to see whether we are allowed to share information with other countries", said Fuad, adding that the country's laws probably should be revised to accommodate the MMOU.

The result otherwise, he said, would be international white-collar crimes that couldn't be punished.

The U.S. Securities and Exchange Commission (SEC) was among the first agencies to ratify the agreement. The SEC believed the MMOU could enhance its ability to obtain information from other jurisdictions for regulatory and law enforcement purposes.

As of November 2007 the MMOU had 44 signatories including including China, Dubai, Hong Kong, India, Israel, Malaysia, Singapore and Sri Lanka.

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