"Indeed there were also indications of embezzlement of funds which were then spread to eradicate traces."
Jakarta (ANTARA News) - Indonesia`s central bank has called on banks and other financial institutions in the country to be alert towards the operations of bank theft syndicates which had become more sophisticated.

"Based on various cases that have happened lately it seems they are syndicate members that operate with plans and sophisticated methods," Bank Indonesia Deputy Governor Halim Alamsyah said here on Thursday.

He said the syndicate like in the case of Bank Mega had used a state-owned company and a regional state-owned company in its modus so that it could be uncovered from the sides of corruption and banking crime.

He said several parties however had seen that the syndicate had also used a money laundering method as seen when the branch of Bank Mega changed the transfer order from to time deposits to on-call deposits.

He said the money laundering allegation was stronger when the funds were later found to be sent to two investment companies namely Harvestindo and Giro Discovery Indonesia.

"Indeed there were also indications of embezzlement of funds which were then spread to eradicate traces. The same method was used in the case of Batubara district administration," he said.

Halim said cases like these according to money laundering experts could only be uncovered thoroughly if authorities applied anti-money laundering laws to trace the accounts of the recipients of the funds.

If only anti-corruption and banking laws are used only government and bank officials that would be affected.

With the increasing cases of theft of bank customers` funds by syndicates Halim called on banks to tighten the implementation of Know Your Customer rules to detect suspected transactions.

He also called on banks to implement the Bank Indonesia Rule Number 3/10/PBI/2001 strictly on the implementation of Know Your Customer principles issued to fight money laundering.

The KYC Principle is based on consideration that it was not only important for eradicating money laundering but also for the implementation of prudential banking to protect banks from various risks in dealing with customers and counter-parties.

Economic observer Ryan Kiryanto said banks must implement KYC principles consistently and with discipline.

"More than that improvement must also be made on the system of control and internal supervision. Periodic rotations and post transfers must be done. The quality of risk management system must also be improved," he said.

He said integrity pact also had to be implemented along with the implementation of a good reward and punishment system and they are all within the domain of banks.

"BI could not reach the technical operations of banks. BI could only supervise indirectly in the form of off-site supervisory. On site-supervisory could only be done in case of a bank believed to be facing a serious problem," he said.
(Uu.H-YH/HAJM/B003)

Editor: Priyambodo RH
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