T

he government is about to finalize a long-delayed bill that will prohibit cash-based transactions of more than Rp 100 million (US$7,300), except for certain purposes, as amounts over the cap should be done through bank transfer only.

The bill was initiated in April 2014 by the Financial Transaction Reports and Analysis Centre (PPATK), along with the National Law Development Agency (BPHN) as well as the Law and Human Rights Ministry.

Later on, the initiating team also involved Bank Indonesia (BI), the Financial Services Authority (OJK) and the Corruption Eradication Commission (KPK), among others.

The bill had entered the 2015-2016 National Legislation Program (Prolegnas), and it has now been included in the 2018 Prolegnas as one of priorities for deliberation, said Law and Human Rights Minister Yasonna Hamonangan Laoly.

He said the bill, briefly revised by BI, was awaiting the signature of Coordinating Political, Legal & Security Affairs Minister Wiranto before it would be brought to President Joko “Jokowi” Widodo.

“The government is committed because the [upcoming] law has a significant role in reducing corruption through suspicious transactions and reducing cash in circulation, [which is costly for BI in its daily operations],” Yasonna said at the PPATK’s headquarters on Tuesday.

Former PPATK chairman Yunus Husein, who also leads the bill drafting team, said the bill excluded certain transactions, like medical payments and payroll, and would not charge offenders with criminal punishments. He said violations would only have to be annulled in the name of law.

KPK chairman Agus Rahardjo warned BI and the OJK to be watchful of money changer companies, which would also be excluded, hinting that such types of businesses had the potential to become a medium for illegal cash transfers.

Karjono, the ministry’s director of regulation harmonization, said BI had been increasingly interested in the bill due to increasing financial cybercrime, while the OJK also decided to join the drafting team.

As the bill only contains 21 articles, Karjono said deliberation at the House of Representatives would not take long.

Limiting cash-based transactions has become a best practice worldwide to combat money laundering, as most countries with similar regulations were dealing with criminal organizations, such as mafias and drug cartels, said PPATK chairman Kiagus Ahmad Badaruddin.

Countries with money laundering regulations that limited cash-based transactions include Italy, Mexico, France, Armenia, the United States and Brazil, he said.

Kiagus cited PPATK data showing that a total of 4,155 suspicious transactions had been analyzed from Dec. 31, 2013, to Jan. 31, 2018. From that number, 1,958 transactions led to corruption, 113 involved bribery and the rest were related to other issues.

“Those corruption and bribery transactions are using cash in form of the rupiah bill, foreign currency bills as well as travel checks,” he said, adding that criminals used cash transactions to avoid the PPATK tracking them down.

In March, Indonesian authorities uncovered a Rp 6.4 trillion (US$464.5 million) money laundering scheme, the largest ever in the country’s history. The case was exposed after a one-year investigation jointly launched by the National Narcotics Agency (BNN) and the PPATK.

The investigation led to the arrests of three people alleged to have made off with a staggering Rp 6.4 trillion in dirty cash between 2014 and 2016.

House Speaker Bambang Soesatyo said the bill limiting cash-based transactions would help combat the bad habit of “money politics”, referring to hundreds of billions of rupiah of illegal cash transactions between politicians and their sponsors to avoid tracking by authorities.

“If you want to be a mayor, governor or legislation member, you have to approach political parties for support. Some [sponsors] are offering ‘shop for votes’, if you want to play it that way,” he said.

Bambang promised that the House’s Commission III, which oversees laws and security, would immediately follow up by forming a working committee (Panja) after the government completes the draft within one or two months.