The Jakarta Post
Indonesia’s Financial Transaction Reports and Analysis Center (PPATK) and the Monetary Authority of Singapore (MAS) are currently investigating the transfer of about US$1.4 billion believed to be stashed by Indonesian individuals abroad.
The probe aims to find out if the transactions, conducted by Standard Chartered Bank on behalf of its Indonesian clients from the bank’s trust unit in Guernsey, the United Kingdom and its office in Singapore in early 2015, were illegal and part of global money laundering operations.
Quoting a source, Bloomberg reported the money belonged to Indonesian nationals linked to the military and the transfer took place just months before a financial transparency rule was introduced in the English Channel isle.
Director General of Taxation Ken Dwijugiasteadi confirmed that the money is owned by Indonesian businessmen, but dismissed speculation of their connection to the military. He said a large part of the funds was moved to Singapore to take advantage of the government’s tax amnesty program, which was officially launched in July last year.
The program offered a generous tax scheme to attract Indonesia’s wealthy to declare their unregistered funds and properties overseas.
Until today, the government has yet to find any indication that the whopping amount of money transferred from tax haven Guernsey to Singapore was a result of illicit activities. One thing is clear, however, is that the transfer further confirmed reports that Indonesia’s wealthy deposited tens of billions of US dollars overseas.
According to a study conducted by the global management consulting firm McKinsey in December 2014, Indonesian nationals kept about $250 billion worth of funds and other assets abroad. Last year, following a leak that showed more than 1,000 Indonesians have set up shell companies abroad, the tax office ordered 78 of them to revise their tax reports.
The disclosure by Standard Chartered of a mega transfer of assets belonging to Indonesian nationals serves as a warning that there is no safe haven where people can hide their money for whatever purpose, be it to avoid law enforcement or evade taxes.
The Automatic Exchange of Information (AEOI), which Indonesia has ratified, can reduce the incidences of tax evasion and fraud. Under this financial transparency policy, tax authorities in the participating countries can exchange data relating to the bank and the accounts of taxpayers.
The member countries of the G20, the 35-member Organization for Economic Cooperation and Development (OECD) and other important financial centers, including Singapore, have committed themselves to implement the AEOI that will enable the government to detect tax revenue lost through non-compliance.
In July, the House of Representatives passed a law that grants tax offices direct access to financial information held by banks and other institutions as part of the AEOI. Beginning next year, Indonesia will automatically receive data and information of the financial accounts of Indonesian citizens in countries where AEOI is enforced and reciprocally share the same data of citizens of state parties to the global financial transparency mechanism.