VZCZCXRO7530
OO RUEHDT RUEHPB
DE RUEHJA #1995/01 3381007
ZNR UUUUU ZZH
O 041007Z DEC 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4004
INFO RUEAWJA/DEPT OF JUSTICE WASHINGTON DC PRIORITY
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC
RUEHGP/AMEMBASSY SINGAPORE 6660

UNCLAS SECTION 01 OF 02 JAKARTA 001995 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP, EAP/MTS, EAP/RSP, INR/EAP, S/CT FOR MAHANTY, INL FOR 
CARLON/BLOOMQUIST, EEB/ESC/TFS 
DOJ FOR AAG SWARTZ, OPDAT FOR ALEXANDRE/BERMAN/HAKIM 
NCTC 
NSC FOR J.BADER, D.WALTON 
KUALA LUMPUR FOR G.CHAPMAN 
TREASURY FOR IA, TFFC, OIA AND FINCEN 
SINGAPORE FOR S.BLEIWEIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PTER KCRM KJUS KTFN EFIN SNAR PHUM ASEC ID
SUBJECT:  PROGRESS TOWARD A TERRORISM FINANCING LAW 
 
¶1. (SBU) Summary:  On November 18, 2009, an Indonesian inter-agency 
drafting team and experts from the National Security Division of the 
US Department of Justice (U.S. DOJ), the FBI, U.S. Treasury, the 
UNODC and DOJ OPDAT met in Jakarta to continue work on a terrorism 
financing law. The current draft law represents a significant 
improvement over Indonesia's 2003 terrorism financing law.  It 
widens criminal liability for terrorism financing activities, 
imposes reporting requirements upon a broad array of financial 
service providers, and establishes a procedure to freeze terrorist 
assets pursuant to UNSCRs 1267 and 1373.  Non-profit organizations 
(NPOs) will be subject to the terrorism financing law, but will be 
regulated by a different, yet to be determined government agency. 
Although further editing remains to be done, the drafting team plans 
to submit the legislation to parliament for inclusion  in the 
2009-2010 legislative agenda.  This is the second major piece of 
criminal legislation drafted in Indonesia this fall with INL 
funding. End Summary. 
 
¶2.  (SBU)  In response to international criticism of Indonesia's 
terrorism law, the Indonesian Financial Intelligence Unit (PPATK) 
requested DOJ OPDAT to assist in drafting a new terrorism financing 
statute.   PPATK assembled an inter-agency drafting team that 
included representatives from the Indonesian National Police, the 
Attorney General's Task Force on Terrorism and Transnational Crime 
(SATGAS), Bank Indonesia, the Ministry of Law and Human Rights and 
the Ministry of Foreign Affairs.  In September 2009, DOJ OPDAT 
sponsored a three-day drafting conference that produced the initial 
draft of a terrorism financing statute.  At the conclusion of the 
drafting session, the team asked U.S.DOJ and UNODC to review the law 
for conformance with international conventions and FATF standards. 
 
¶3.  (U) On November 18, 2009, experts from U.S. DOJ (Karl Sandoval, 
National Security Division), the FBI (David Jensen, Office of 
General Counsel and Special Agent Alvie Price, Terrorist Financing 
Operations Section), U.S. Treasury (Derek Politzer, Office of 
Terrorism and Financial Intelligence), Vipon  Kititasnasorchai of 
the Terrorism Prevention Branch, UNODC Bangkok and Embassy RLA met 
with the inter-agency drafting team in Jakarta to critique and edit 
the September draft of the terrorism financing law.  The Canadian 
Department of Justice also reviewed the draft statute and supplied 
written comments. 
 
NON PROFIT ORGANIZATIONS 
------------------------ 
¶4.  (SBU) The experts primary criticism at the second drafting 
conference was the bill's failure to explicitly address and regulate 
the use of NPOs to finance terror.  The 2008 FATF review of 
Indonesia by the Asian Pacific Group on Money Laundering had 
cautioned that the lack of regulation and oversight made NPOs 
particularly vulnerable to misuse for money laundering and terrorism 
financing.  Citing political and religious sensitivities, the 
drafting team responded that it was politically unfeasible to 
explicitly incorporate NPOs in a terrorism financing bill.  However, 
Muhammad Yusuf, Deputy Chief, PPATK, stated that NPOs would be 
subject to the terrorism financing law, would be required to file 
suspicious transaction reports and could be prosecuted for terrorism 
financing activities under the statute.  Another PPATK interlocutor 
stated that PPATK understood that the lack of NPO regulation posed a 
serious threat and explained that the Government of Indonesia was 
completing a NPO census as a first step to determine how to better 
regulate and monitor NPO activities. 
 
FREEZING TERRORIST ASSETS 
------------------------- 
¶5. (SBU) Indonesia currently lacks an effective mechanism to freeze 
terrorist assets in conformance with UNSCRs 1267 and 1373.  The 
draft bill sets forth a two-step freezing process consisting of an 
initial restraint by a financial service provider followed by the 
issuance of a freeze order by the PPATK.  This is a cumbersome 
procedure which requires prompt, coordinated action by banking 
officials and government agencies within a three-day period provided 
in the draft law.  The provision places too much responsibility and 
affords too much discretion to financial service providers who, in 
some instances, must determine what to do with the restrained assets 
in the absence of timely direction from PPATK.  Further, in some 
instances, it is unlikely that three days will be enough time to 
determine whether to issue a freeze order.  Nonetheless, the statute 
 
JAKARTA 00001995  002 OF 002 
 
 
ostensibly complies with UNSCR 1267 and 1373.  How the Government of 
Indonesia implements these provisions will determine their 
effectiveness. 
 
CONCLUSION 
---------- 
¶6. (SBU) Work remains to be done upon the draft law.   A third 
drafting session is set for the middle of December to review an 
additional 20 articles.  Nevertheless, the draft is an important 
step forward.  It widens criminal liability for terrorist financing 
acts, provides a mechanism to freeze terrorist assets, and applies 
to NPOs.  Whether the law will survive parliamentary review intact 
and whether there is political will to freeze assets and apply the 
law to NPOs remains to be seen. 
 
HUME