Habitus of Money Laundering Practices in Indonesia: Triangle

Symbiotic Mutualism of Politicians-Professionals-Entrepreneur

Fauziah Lubis

Faculty of Sharia, Universitas Islam Negeri Sumatera Utara

Jalan Williem Iskandar Pasar V, Medan, Sumatera Utara, Indonesia

Keywords: Money Laundering in Indonesia, Corruption Practice, Political Transaction.

Abstract: Money laundering is an umbrella term that deals with three different people simultaneously, namely

politicians, professionals, and entrepreneurs. The three people are closely intertwined in their practice of

money laundering. An act of money laundering is part of strategies by politicians who want to secure their

financial assets which are stolen from state properties to avoid detection by existing legal instruments. In

reality, law enforcement is weak in preventing and punishing the crime. This is due to the effect of symbiotic

triangle mutualism among politicians, professionals, and entrepreneurs. This study focuses on how money

laundering practice has become a new habit in Indonesian bureaucratic administration. Based on the focus on

the three aspects mentioned above and on the qualitative data analysis, the results of the study were: 1) To

find the questionable financial transaction. 2) To analyze the development of money laundering practice in

Indonesia. 3) To provide data in the form of the spectrum of money laundering practice among politicians,

professionals, and entrepreneurs.

1 INTRODUCTION

Money laundering simply is an attempt to cover up or

disguise money or funds that are obtained through a

criminal act such as illegal funds in terms of

corruption with the purpose of making stolen assets

as if they were legal assets owned by an individual or

organization. As stipulated in Article 2 of Laws

Number 8, 2010 about Prevention and Elimination of

Criminal Acts related to money laundering, there are

26 known categories of the original criminal acts.

The practices of money laundering were initially

started collecting money in the trade transactions of

alcohol, drugs, and other similar stuff. Further, this

crime was extended to accumulate money from

different sources of an illegal transaction, such as in

the obvious example of corruption. Corruption has

destroyed national development plans which include

aspects of the economy, social, and political

conditions and culture. In fact, the negative impacts

of the act of money laundering are not less severe than

those of other serious criminal cases.

It is known that trends and patterns in money

laundering by criminal actors have increased in

number following the development of modernization.

In Indonesia, this action has widely spread. However,

it can only be done by elites. Money laundering has

often been used by politicians, professionals, and

entrepreneurs as a way to secure their wealth without

going through transactions in Indonesian currency.

Money laundering is a form of injustice and

stupidity of the elites who pursue wealth without

showing concern about the prosperity of the state.

Based on the survey by the Financial Crimes

Transaction and Analysis Center (PPATK), it was

discovered that since the period of 2005 until

December 2016 there have been 189 cases of money

laundering that have received court decisions. The

most dominant case was corruption with 52 decisions

(29%), followed drugs with 32 decisions (19%), and

fraud with 30 decisions (17%). The following flow

chart shows the percentage of the cases.

The role and responsibility of Indonesia in

preventing and eliminating the criminal act of money

laundering contribute real effects over international

relations. This case is a big issue and concern among

international communities. For that purpose, various

international and regional organizations have been

established to fight against it. According to the

estimation of several international agencies, as

reported in websites of PPATK accessed on 1

December 2018, it stated that “money laundering has

Lubis, F.

Habitus of Money Laundering Practices in Indonesia: Triangle Symbiotic Mutualism of Politicians-Professionals-Entrepreneur.

DOI: 10.5220/0009399000050010

In Proceedings of the 1st International Conference on Anti-Corruption and Integrity (ICOACI 2019), pages 5-10

ISBN: 978-989-758-461-9

globally reached 1 trillion to 2.5 trillion US dollars

per year. This amount is considered very large in

comparison with money for the Gross domestic

product (GDP) in Indonesia, which only reached 435

billion US dollars in 2007 (PPATK, 2018).”

Figure 1: The chart shows the criminal acts of corruption as

the highest percentage among other criminal cases that

occurred in 2015-2016 (PPATK, 2017).

In its development, the modes of money

laundering have turned out to be more complex

following the more various facilities and instruments

for transaction offered by the financial service

provider. This practice has become very popular in

manipulating financial agencies beyond the financial

system. The report by the Asia Pacific Group (APG)

in Yearly Typologies Report: Method and Trends of

Money Laundering and Terrorism Financing

elaborated that “there are some typologies of money

laundering based on the APG studies, among others

is Foreign Currency Changing/Cash Conversion”

(APG, 2018). This matter has often been overlooked

by law enforcement agents in which a money changer

or a place for changing local currency into foreign

currency is manipulated by the actors to conduct

money laundering.

There is no tough security system in controlling

financial transaction done by a money changer that

can minimize the amount of money to be exchanged.

In other words, there is no limitation on the amount

of money in the transaction. Without the controlling

system, the money changer becomes an easy target

for the actors to accumulate wealth without fears by

politicians, professionals, and entrepreneurs to

conduct their criminal acts. Eventually, the act of

money laundering by them can go on successfully.

Continuous research is needed to improve the

study and give the solution to the reason why elites

practice the money laundering successfully. Some of

the solutions are to provide control over the financial

system by agencies beyond the state financial system.

The legal sanction should be passed to the criminal

actors of money laundering, and justice enforcement

should be given to legal authorities who are tempted

to conduct corruption and business transactions by

individuals who conduct money laundering should be

stopped. If all these aspects can be performed, the

triangle of politicians-professionals-entrepreneurs

should come into a stop. Such an effect can influence

anyone who is tempted to conduct money laundering.

The practice of money laundering will gradually

diminish in Indonesia.

The motive of the actors of money laundering as

by the triangle symbiotic mutualism is to transfer and

get free from the proceeds of crime, separate proceeds

of crime from criminal acts enjoying the results of

crime without any suspicion of the criminal actors,

and reinvest the assets as if it were a legal business.

Consequently, they are free to carry out their crime

without suspicion of other people.

2 METHODOLOGY

In this research, the object is the politicians-

professionals-entrepreneurs based on the reports from

the Financial Crimes Transaction and Analysis

Center (PPATK), which is located at 35, Ir. H. Juanda

Street, Jakarta Pusat. PPATK is an independent

agency as regulated in Laws No. 8, 2010 concerning

Prevention and Eradication of Money Laundering and

is directly responsible to the President.

The research method also applies to an interview.

Riduwan explains that: “interview is a way of

collecting data that is used to obtain information

directly from the source” (Riduwan, 2012, p. 29). The

form of an interview that was conducted by the

researcher is in the unstructured form where the

author asked questions related to research topics, and

further, the next questions were developed according

to the answers obtained from the informants to

produce a comprehensive understanding of the

various problems of the study. In order to get more

data sources for the research, the author used

theoretical information or data from references,

journals, books, and other articles that are related to

the problem of the study.

The data obtained from the PPATK reports were

analyzed and supported by legal materials derived

from regulations in the illegal acts of money

laundering. The results of the study were then

classified and interpreted according to the data

produced through qualitative studies. Then the

classification of the data would produce various

answers to the problems discussed in the study.

Further, the data analyzed qualitatively were

presented in a systematic description. All data were

Criminal Acts in 2005-2016

Embezzlement

Fraud

Corruption

Drugs

Other Criminai Acts > 4

6th Qtr

ICOACI 2019 - International Conference on Anti-Corruption and Integrity

selected, described in analysis so that it can provide

conclusions and suggestions on the subject matter

which are examined as realized solutions to prevent

money laundering crimes committed by Politicians-

Professionals- Entrepreneurs.

The stages of money laundering, according to

Sjahdeini are: (1) Placement, the first stage of money

laundering, is to place (deposit) the illicit money into

the financial system. 2.) Layering, in this stage actors

of money laundering, try to separate the illicit money

from its source. 3.) Integration, at this stage, money

that is stolen is returned back into circulation in the

form of net income, even tax-able (Sjahdeini, 2007,

pp. 33–37).

Figure 2. Explanation of stages in money laundering

(PPATK, 2017).

The strategy of money laundering continuously

increases by using technology and financial

engineering that are quite complicated. This happens

simultaneously at the stage of placement, layering,

and integration, therefore in its handling requires a

systematic and continuous improvement of

capabilities, consequence the objects such as

politicians-professionals-entrepreneurs cannot carry

out criminal practices (Hamilton-Hart, 2001).

In jurnal.kpk.go.id released that: “The activities

which are carried out to find assets of prosperity, by

tracking assets owned by the criminals, suspected,

convict and other related parties allegedly as the

evidence of committing corruption and money

laundering” (Basir, 2017).

3 RESULT AND DISCUSSION

3.1 Corruption and Future of

Indonesia

One of the endless problems which are reported by

Indonesian Media is corruption cases. Corruption is

always carried out by Indonesian politicians. Natasha

Hamilton in (Anti-Corruption Support Strategies in

Indonesia) explained that “Obstacles to reducing

corruption in Indonesia include the economic and

political constraints facing the current government

and the entrenched nature of corruption.”

Stephen Sherlock, in his article Combating

Corruption in Indonesia? The Ombudsman and the

Assets Auditing Commission explained, “Early

optimism that post-Suharto governments would lead

a systematic campaign against corruption has largely

been disappointed. The creation of the ombudsman

and the Assets Auditing Commission (KPKPN) were

hopeful signs, but both initiatives are symptomatic of

the weaknesses besetting Indonesia's anti-corruption

efforts. Despite their best endeavors, both

organizations have weak powers, are under-

resourced, receive only token political support and

exist in isolation from other investigative and

enforcement agencies” (Sherlock, 2002).

Corruption is the biggest concern in Indonesia

than government officials in another country.

Corruption has been becoming a hereditary habit for

government officials in Indonesia. The difficulty in

reducing corruption is an endless problem in

Indonesia. Various anti-corruption institutions in

Indonesia have various obstacles to resolving

corruption cases. The official effort to reduce

corruption is only effective as part of the campaign

but does not run as expected; the problems of

corruption cannot be stopped. Punishment for

corruption does not make corrupt officials come into

a stop. As a result, the problem of corruption is

continued in Indonesia.

As has been proven, the tendency of politicians to

have problems in the direction of “scandalization of

corruption”. Simon Butt, in his research entitled Anti-

corruption reform in Indonesia: an

obituary? Explaining “Indonesia's Anti-Corruption

Court had until recently convicted all the defendants

brought before it by the Corruption Eradication

Commission. Many of these were well-known and

politically powerful figures. Yet both the Court and

the Commission are under threat. Between February

and October 2011, the Anti-Corruption Courts issued

more than 20 acquittals, and on 11 October 2011, for

the first time, a defendant prosecuted by the KPK

itself was acquitted” (Butt, 2011).

Placement

•To place (deposit) the illicit money into the financial

system.

Layering

•Actors of money laundering try to separate the

illicit money from its source.

Integration

•Loundered money is taken back to the circulation in

the form of legal income even taxable

Habitus of Money Laundering Practices in Indonesia: Triangle Symbiotic Mutualism of Politicians-Professionals-Entrepreneur

In his view, it was revealed that the KPK had been

the target of efforts to discredit and hobble them,

apparently orchestrated by people the Commission

has investigated. If the current trend continues, the

Anti-Corruption Court and the Corruption

Eradication Commission may soon join the growing

list of Indonesia's failed anti-corruption initiatives,

Indonesia can also be threatened with bankruptcy due

to corrupt behavior.

Jon ST Quah in his research entitled Causes and

Consequences of Corruption in Southeast Asia: A

Comparative Analysis of Indonesia, the Philippines

and Thailand, explained that “Corruption in Indonesia

can be attributed to the low salaries of the civil

servants and political leaders, the ample opportunities

for corruption in many public agencies, and the low

probability of detection and punishment of corrupt

offenders. Anti-corruption strategies in Indonesia

will be more effective if their political leaders

demonstrate their commitment to eradicate

corruption” (Quah, 2003).

3.2 Habitus in Money Laundering

Practices

The concept of Habitus is not self-created by

Bourdieu, but it is a traditional philosophical idea that

he makes a comeback (Ritzer & Goodman,

2004). Adib in journal Bio-Kultur said, “in the

tradition of philosophy, habitus is defined as a habit

that is often referred to as habitual namely

appearance; traits related to the typical conditions of

the body such as the way we eat, walk, talk, and even

in the way we get rid of our snot. According to

Aristotle, habits are interpreted as categories that

complement the subject as substance. There is no

category, nor does it change the substance. What

categories are inherent in substance and

inseparable? According to Aristotle is the quality of

rationality and ideality” (Adib, 2012).

Basir explains that: “Money Laundering as a

crime has a characteristic that is a double crime, not a

single crime. The form of MONEY LAUNDERING

ACTIVITIES is characterized by a form of money

laundering. As a crime that is follow-up crime, while

the original crime is referred to as predicate

offense/core crime or as an unlawful activity, namely

the original crime that generates money which is then

carried out by the washing process” (Basir, 2017).

Habitus has the form of “arena” in it. Bourdieu

provides an overview of the arena, namely in the form

of special spaces for the community. There are

various arenas, such as the educational arena, the

business arena, the arena of artists, and the political

arena. If people want to succeed in an arena, then they

need to have habitus and capital. Politicians-

Professionals-Entrepreneurs are highly educated

people, and they are master "arena" that Bourdieu.

Hoarding wealth by conducting money laundering,

and they do it repeatedly.

Figure 3. Describes that politicians, professionals, and

entrepreneur people each compete to practice money

laundering.

PPATK stated, “Understanding of Criminal Acts

of Fund Source TPPU, the public considered that

there are 5 Criminal Acts of Fund Source TPPU

namely, Criminal Act of Corruption, Criminal Act of

Bribery, Criminal Act of Narcotics, Criminal Act of

Taxation, and Criminal Act of Psychotropic. In terms

of Understanding of TPPU's Main Actors, the public

considered that 5 Profiles The main Actors of TPPU

were Legislative Officials, Executives, Judiciaries,

Members of Political Parties, and Entrepreneurs”

(PPATK, 2017, 2018).

In the world of politics and business (money

laundering) or attempts to conceal and disguise the

source of money/funds or assets are

commonplace. The result of crime through various

financial transactions in order to appear as legitimate

activities. The essence of money laundering is to

obtain money in a dirty way so that the money looks

legal and belongs to them by conducting illegal

activities such as stealing, robbing, cheating,

corruption, illegal business, etc.

ICOACI 2019 - International Conference on Anti-Corruption and Integrity

3.3 Triangle Symbiotic Mutualism of

Politicians-Professionals-

Entrepreneurs

It should be noted that it is related to the public

understanding of the characteristics of TPPU's

actions. Based on the survey results it is known that

the three characteristics TPPU which are best

understood by the public namely, using funds/assets

from crime to buy property assets, saving funds/assets

of crime in an unknown place, and using funds/assets

of crime to buy a motorized vehicle. While the three

characteristics of TPPU actions accessed through the

PPATK explained that the public tends not to be well

understood is about leaving/empowering fund/illicit

assets to professional services such as consultant,

notaries, etc. Using funds/result of crime to purchase

insurance policies, and using funds/result of crime to

buy auction products" (PPATK, 2017, 2018).

Private sector employees are still in the top

position in the Report of Suspicious Financial

Transactions (LTKM) recorded by the Financial

Crimes Transaction and Analysis Center

(PPATK). In addition, other professions from

housewives to administrators of political parties are

recorded in Suspicious Financial Transaction

Reports. LTKM is a financial report by PPATK

quarterly. The latest data reported by the PPATK is

cumulative until September 2018 for this year.

The PPATK will analyze whether there is an

indication of a crime in the suspicious

transaction. After that, the PPATK will forward the

report to law enforcement officials in accordance with

the indications of a crime found by PPATK. “From

the data, PPATK said only 32.1 percent were

identified as criminal acts with fraud (36 percent),

corruption (18.3 percent), and narcotics (16.1

percent)” (Irawan, 2018).

Apart from the criminal acts of corruption

committed by government officials, another serious

problem in handling cases of money laundering by

the symbiotic triangle mutualism again led to the

form of weak law enforcement in Indonesia, which

caused cases of money laundering and various other

major crimes to be very difficult to overcome. The

legal immunity of some individuals, which is in the

circle of Politicians-Professionals-Entrepreneurs is

proof that they are able to escape the snares of crime

in Indonesia.

Slow legal handling caused by several factors, one

of the Legislature of Indonesia, who refused to certify

the design of money laundering laws in 1996. There

were concerns that the application of laws and

regulations regarding money laundering in haste will

raise the risk of escaping investor capital abroad and

can threaten the country's economy. This is feared to

cause foreign investors not to do business in

Indonesia.

The biggest obstacle in law enforcement

regarding money laundering crimes is about the

evidence that must be carried out by the

Prosecutor. This issue is at least according to Raj

Bhala Efforts to Combat Money Laundering (Anti-

money laundering) explain that there are two

principles in each prosecution of money laundering

which is the duty of prosecutors, namely: First is

understanding complicated elements of money

laundering. Second is the wire transfer system

implemented in almost all countries internally

between banks and financial institutions (Bhala,

2016).

4 CONCLUSION

The contribution of the reform’s content has not been

able to be seen to eradicate the perpetrators of

corruption in Indonesia, money laundering, which is

also often carried out by elites makes the problem

increasingly complex. The KPK which has been

established in the reform era, through its various

contributions to the persistence of the problem of

corruption, also often gets problems, which

sometimes leads to threats to investigators. Protection

of KPK investigators, as well as internal reform, strict

safeguards for investigators so as not to endanger

their lives, and the existence of outside intervention

are very necessary, as a result, what happens now to

improve organizational self-discipline is only lack of

attention.

Recently money laundering practices were

initially carried out on money obtained from liquor

trade, narcotics, etc. However, it was expanded to

money obtained from other sources of crime. As a

close example is money obtained from corruption.

This corruption has damaged national development

which includes: economic, social, political, and

cultural. This is rampant in Indonesia with the main

actors being inseparable from the three links of

mutualism symbiosis, namely Politicians-Business-

Professionals

Indeed, money laundering is still an interesting

issue for the world. The process of transferring illicit

funds from one country to another and the process of

laundering dirty money through placement in the

economic system has raised serious problems both on

a national and international scale. The main purpose

Habitus of Money Laundering Practices in Indonesia: Triangle Symbiotic Mutualism of Politicians-Professionals-Entrepreneur

of this crime is to make a profit for both the individual

and the group that committed the crime.

Politicians-Professionals-Entrepreneurs in

Indonesia are able to carry out the practice of money

laundering easily, without being caught in serious

punishment. Through actions that violate the law,

their income or assets that obtains from the proceeds

of crime can easily be converted into funds that

appear to come from legitimate or legal sources. This

mode of criminal acts from time to time is

increasingly complex using technology and financial

engineering that is quite complicated. Weak power of

legal and increasingly rapid technological

developments have caused the three symbiotic

networks to be able to practice money

laundering smoothly. Law seems to be unable to

carry out justice to those in the circle of Politicians-

Professionals-Entrepreneurs in this country.

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ICOACI 2019 - International Conference on Anti-Corruption and Integrity