Indonesia’s Financial Transaction Reports and Analysis Center wants the central bank to require any transaction of more than about $8,500 to be conducted through bank transfers.
Bank Indonesia is coming under pressure to issue the decree because of doubt the country’s parliament will ever act against corruption.
Most of the big graft cases prosecuted by the country’s independent Corruption Eradication Commission (KPK) have involved seizures of cash — usually U.S. dollars, Singapore dollars, or Indonesia rupiah.
Earlier this year, a government panel in Israel set up to fight money laundering and tax evasion recomended that cash transactions between businesses be limited to 5,000 shekels ($1,436). The plan would also limit cash deals between private citizens to 15,000 shekels ($4,300).
“Cash and cash equivalents are the fuel of the black economy,” according to an official appointed to the panel by Prime Minister Benjamin Netanyahu.
The Jakarta Post said, “Crooks love to settle payments in cash because it is safer than bank transfers, which can be easily traced by the that can pass the information to the KPK.”
But limiting cash transactions would be hard because so few Indonesians use banks.
A “majority of the country’s population [of 240 million], especially those living in rural areas, have yet to open bank accounts and every transaction has to be conducted in cash,” the Jakarta Post said.
Even some wealthy coffee and cacao farmers in the Sumatra and Sulawesi regions have no bank accounts, the paper said. They use trucks to haul cash.
“Meanwhile,” the report said, “it’s hard to imagine that opening a savings account crosses the minds of people surviving on bare subsistence.”
About 80 percent of Indonesia’s population older than 15 didn’t have an account with a formal financial institution last year, according to one study.
There were only 14.5 million credit card holders, according the study, 5.7 million internet banking users, and 16.5 million mobile banking customers.
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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.
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