New law to stem money laundering, terrorism financing

THE country will approve a regulation to stem money laundering and terrorism financing by requiring fintech players to report suspicious transactions.

Providers of peer-to-peer (P2P) lending, equity crowdfunding and other financial technology services will have to report such transactions to the Financial Transaction Reports and Analysis Centre (PPATK) under the new regulation, which amends one issued in 2015, its chief Dian Ediana Rae said.

“The amended regulation is waiting for signing by the president, ” he said. “Hopefully, it will be issued in the near future.”

P2P lending platforms connect individuals who want to access loans directly from other individuals, while equity crowdfunding platforms allow companies to raise capital online from investors.

At present, only e-wallets such as OVO and GoPAY are obliged to report their transactions to PPATK.

The anti-money-laundering agency now monitors transactions by P2P lenders, equity crowdfunding platforms and providers of other fintech services solely through reports from banks to the Financial Services Authority.

P2P lenders are required to open virtual accounts in banks to enable supervision.

Dian said that based on experiences in other countries, there had been misuses of these new payment methods for terrorism financing owing to lack of scrutiny when users set up their accounts.

E-money and e-wallets had also been misused for purchases of materials linked to terrorism activities through e-commerce, as well as for domestic and overseas fund transfers, he added.

Financing is the most critical part of any terror group and militants have justified illegal means like robbery to raise funds, experts say.

Funders of terror acts have, for years, used unconventional methods to transfer foreign money to South-East Asia’s largest economy.

PPATK found in early 2017 that Bahrun Naim, one of Indonesia’s most notorious militants fighting alongside the Islamic State group in the Middle East, had used online payment services such as PayPal, and the cryptocurrency bitcoin, to transfer money to his comrades back home. — The Straits Times/ANN

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