The Jakarta Post
The sum of Rp 100 million (US$7,300) or its equivalent in foreign currencies set as the maximum cash transaction threshold in the bill on cash transactions seems appropriate for such a vast archipelagic country as Indonesia, even though the Corruption Eradication Commission (KPK) recommended a much smaller threshold of Rp 25 million, in view of the advances in electronic payments.
Indeed, with the growth of debit cards, electronic transfers and mobile payments, the need for big cash payments should have declined significantly as long as the transactions are legal. Big cash transactions are the dominant payment mechanism only for drug dealers, corrupt officials, money launderers, tax evaders and other criminals. Cash facilitates crime because it is anonymous, and big bills are especially problematic because they are so easy to carry and conceal.
But to prevent the cash threshold from becoming a contentious issue that could protract the upcoming deliberation of the bill, a Rp 100 million cash threshold could be appropriate. We urgently need a law on cash transactions because money laundering and corruption are still massive problems in the country. Just look at the huge number of United States and Singapore dollar, or Rp 100,000, bills often seized by the KPK from corruption suspects during raids.
Moreover, the cash transactions bill will complement the 2010 Money-Laundering Law, which has required finance companies and sellers of high-value goods such as jewelry or property to adhere to the “know-your-customer” code in transactions of Rp 100 million or more. The law even requires cash transactions worth Rp 500 million or more to be reported to the Financial Transactions Report and Analysis Centre (PPATK).
Bank Indonesia also requires non-bank payment system operators to implement prevention measures against money laundering through comprehensive customer due diligence (CDD) and to report any suspicious transactions to the PPATK and to freeze suspicious accounts. The central bank has also tightened the eligibility requirements for owners and directors of money changers and moneyremittance service providers
One of the main problems is the weakness in implementing the necessary safeguards and control mechanisms relating to CDD requirements.
Because of the absence of durable relationships with customers and the nature of transactions, money remitters and currency-exchange offices often find it particularly challenging to perform ongoing monitoring with a view to detecting anomalies and risk profiles.
The cash threshold will stimulate sectors providing high-value goods and services to ensure the ready availability of non-cash payment mechanisms such as electronic payment systems, where they can be recorded and tracked.
Hence, a law on cash transactions and its cash threshold will have an impact on combating financial crime: either by stopping such transactions, or by enabling law enforcement to access records that trace the origin and beneficiary of funds.