Wednesday, January 06, 2016
Legal Cooperation Among ASEAN Countries: Combating Money Laundering In Indonesia
Efendi Lod Simanjuntak
Money laundering activities have been on the rise in recent years and have spread rapidly across Southeast Asia. The impact of this type of crime has inevitably had an effect not only upon Indonesia, but also other countries, as perpetrators seek to commit illegal activities across different jurisdictions and legal systems. These illegal activities have now become rampant due to the development of information technologies, such as the internet and other wireless communications devices, not to mention increasingly advanced transportation systems that allow perpetrators to easily move from one country to another in order to avoid prosecution.
In this digital era, a period marked by so-called globalization,countries are becoming increasingly borderless and people around the globe are more connected than ever. This convenience enables criminals to launder illicit money globally. Cross-border money laundering, which is mediated by financial institutions, involves the practice of placement, layering and the integration of the proceeds of crime. Money laundering is also a global phenomenon and an integral part of transnational crime. Indeed, this crime has long been dubbed, “hostis humanis generis” or the common enemy of the civilized nations. Money laundering has become an international problem, in other words, which no single country is capable of tackling alone.
Given the unprecedented reality of this crime occurring not only in Indonesia but also in neighboring countries, ASEAN countries are currently facing a critical time as regards the enhancement and promotion of law-enforcement cooperation in order to fight this type of crime. Such cooperation should stretch beyond the current practice of law authorities exchanging information.
The importance of enhancing legal cooperation is not only evident in Indonesia’s signing of extradition treaties with several ASEAN countries, such as Malaysia, the Philippines and Thailand, but could also be seen when Indonesia signed the Mutual Legal Assistance in Criminal Matters with ASEAN countries (“2004 MLAT”) back in 2004.
The 2004 MLAT was intended to improve the effectiveness of law enforcement authorities as they attempt to prevent, investigate and prosecute offences. However, the 2004 MLAT is limited in that it does not provide its signatories with any extraterritorial jurisdiction, as is available in any normal extradition treaty.
The case of Singapore, where no extradition treaty exists with Indonesia, is a prime example of how MLAT has not done a good job of combating money laundering. Indeed, it was recently reported that more than 45 Indonesian fugitives have fled the country in order to avoid prosecution in Indonesia. These fugitives have allegedly stolen a huge chunk of money estimated to be around US$ 87 million.
Many commentators have long believed that the absence of any extradition treaty between Indonesia and Singapore is the primary reason why fugitives cannot be extradited to Indonesia. However, this has not been the case for Indonesia and Colombia. The two countries have not signed any extradition treaty, and yet Mohamad Nasaruddin, a high-ranking politician (from the Partai Demokrat) was successfully returned to Indonesia from Colombia after a successful manhunt.
In fact though, the existence of extradition treaties is no guarantee that fugitives will end up being extradited to Indonesia. The cases of the late Hendra Raharja, who fled to Australia, and Djoko Chandra, who entered the safe-haven of Papua New Guinea (PNG) are just two examples of cases that could not be resolved despite Indonesia having signed extradition treaties with the two countries in question. There was also the case of Indonesia denying an extradition request from the Philippine government relating to Klaus Ernest Heinrich in 2000, in spite of the fact that the two countries signed an extradition treaty back in 1976.
How should this intractable problem be addressed? The answer is through Mutual Legal Assistance, which covers a larger area than a traditional extradition treaty, and which can conceptually provide a decent substitute for an extradition mechanism only at a broader scale.
II. Legal Cooperation Via an MLA Mechanism Urgently Needed
The urgent need for legal cooperation is in line with the 2015 ASEAN Economic Community framework, under which economic integration is to be followed and supported by legal integration.
Legal integration refers to a judicial contribution along with contributions from law authorities among ASEAN countries in order to protect and back up the free movement of investment, people, goods, services and other economic activities in the region. The integration of these two areas, economic and legal, correlates directly with the universal value of social justice, as mandated under Pancasila’s second principle on humanity. Perpetrators continue to avoid justice and walk free unpunished however, because an absence of legal instruments, such as extradition treaties, is not in line with a notion of international justice that adopts universal human values.
Traditionally, extradition has been a mechanism whereby a person who has been accused or found guilty of a crime is transferred from one country to another country in which the alleged crime was committed. Historically, extradition treaties have enabled countries to enforce their laws beyond the jurisdiction of their national borders. Indeed, due to the sovereignty principle, no country can enforce its laws within another jurisdiction without an extradition treaty. Extradition treaties can thus be considered as an embodiment of “mutual consent” between two countries that make it possible for a foreign country to implement its laws upon foreign soil. In the case of money laundering, extradition treaties play a central role and have an important strategic position.
However, the existence of an extradition treaty does not automatically guarantee the transfer of any fugitives from requested states to requesting state, as political and economic factors often come into play, as has been alleged in the case of Indonesia and Singapore. On the other hand, in the absence of any official extradition treaties, some countries manage to cooperate bilaterally across a wide spectrum of issues, not only in order to locate and trace illicit assets in possession of the alleged perpetrators, but also to extradite the accused to the country in which the crime was committed. This anomalous situation has caused some scholars to doubt the effectiveness of the traditional extradition treaty.
Mutual Legal Assistance (MLA) is a treaty drawn up for the purposes of exchanging information relating to criminal matters in the areas of prevention, investigation and prosecution. However, the 2004 MLAT, which has been in effect since 2004 throughout the ASEAN region, has not been implemented properly due to prevailing political and economic influences. Nevertheless, legal instruments should be the foundation of each ASEAN member looking to initiate cooperation in criminal matters, such as in the case of Indonesia and Singapore.
Furthermore, the relationship between Extradition and MLA is categorically to co-exist and to supplement each other. Both instruments have legal binding status based on the pacta sunt servanda principle. Extradition is traditionally rooted in international relations and MLA is common practice nowadays. So, for the sake of the common interests of all nations and in a joint effort to combat transnational crime, especially money laundering, the absence of an extradition treaty should not end up hampering cooperation. In other words, since MLA has a broader scope and spectrum than extradition does, extradition becomes insignificant when compared with MLA measures. In addition, MLA is hypothetically considered an independent variable and also has a substitutive function as regards extradition, so that extradition treaties inevitably become less important.
Nevertheless, Indonesian fugitives still continue to both seek and find refuge abroad, in countries such as Singapore, and remain at large, despite the existence of the 2004 MLAT, as the agreement is allegedly being influenced by the political or economic considerations of the harboring nation. A judicial initiative is urgently needed then to bridge this anomaly. The difficulty of implementing both MLA and extradition treaties among ASEAN countries, where “non-legal” intervention is apparently a very real matter, cannot be overstated, and thus it is high time for the region to engage in a paradigm shift away from treating MLA and extradition as “political instruments” to starting to treat them as “legal instruments”. Such a shift would inevitably require the participation of the courts however, especially in Indonesia, where the many foreign MLA requests for extradition should ideally have been processed through the courts first in order to be judged on whether such requests comply with domestic law and are not contrary to Indonesian notions of public order.
This concept implies that the final say in the accepting or refusing of any MLA or extradition should no longer be in the hands of the President or a Central Authority, as an executive power, but should be the domain of the court. The same principle applies to domestic MLA requests involving Indonesian fugitives abroad and should be applied on a reciprocal basis.
Furthermore, any court judgment should be considered a cross-jurisdiction judgment that is recognized and which can be enforced within the jurisdiction of all ASEAN countries. This idea follows the recent trend in international criminal law, which is seeking to confront the free movement of criminals across globe with united international cooperation via the execution of a “free movement of judgment” that can be implemented internationally across jurisdictions.
Money laundering has become an international problem that needs an international solution through the development of law enforcement cooperation among nations, especially in East Asian region. This concept of law cooperation includes the implementation of the MLA and also covers a broader spectrum. In this formulation, law enforcement becomes not just an instrument of substitution in the absence of an extradition treaty, but also a mechanism for the free movement of judgment across jurisdictions. For Indonesia, this principle applies to Indonesian fugitives hiding abroad on a reciprocal basis.
Efendi Lod Simanjuntak is a practicing lawyer in Jakarta, further queries can be emailed to: [email protected]
See Francis Fukuyama, “The Origin of Political Order,” (New York: Farfar, Strauss and Giroux, 2011), page.12 For further reading on how globalization is affecting various countries, see Thomas L. Friedman & Michael Mandelbaum, “That Used to Be US,” (New York: Farrar, Staus and Giroux, 2011), page 57.
See Julia Layton, “How Money Laundering Works”, http ://www.howstaffworks.com
Europol, “High-tech Crime Within the EU, Old Crimes, New Tools, Treat Assessment 2007, File Number #2477781, page 53.
The UN Convention on Transnational Organized Crime 2000 was ratified by Indonesia in Act No.5 of 2009.
See Syaiful Bachri, “Penegakan Hukumterhadap Kejahatan Pencucian Uangdalam era Globalisasi”, dalam Pathorang Halim, (Djakarta: Total Media, 2003), page 2.
Malaysia (1974), Philippines (1976), Thailand (1978), Australia (1994) and PGN (2014).
The 2004 MLAT was signed in Kuala Lumpur on 29 November 2004 by Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore and Vietnam.
See the Preamble to Mutual Legal Assistance in the 2004 MLAT.
ICW notes that most of these Indonesian fugitives are hiding in Singapore. See Kompas, Monday July 4, 2011 and sources: http://politik.kompasiana.com
The Economist, 06, 2011.
The fugitive was believed to be a mastermind in the Wisma Atlet corruption case. This notorious convict had fled from Indonesia to several countries and was finally captured in Cartagena, Columbia. This cooperation between the Indonesian KPK and Columbian Interpol culminated in the successful transfer of the fugitive to Indonesia to face justice, despite the absence of any extradition treaty between the two countries.
The fugitive was believed to have played a key role in the Bank Bali case and is currently believed to be residing in PNG. All attempts made by Indonesian authorities to bring him home have proved unsuccessful, even though the two countries have signed an extradition treaty.
Act No.6 of 2015 on the Extradition Treaty Between Indonesia and PNG and Act No.8 of 1994 on the Extradition Treaty Between Indonesia and Australia.
Economic integration among ASEAN countries is nowadays publicly known as the ASEAN Economic Community and has developed a framework for the free movement of capital, labor, and business and services. The idea of free movement of foreign judgments as regards legal cooperation, especially in criminal matters, should be seen as an option for strengthening economic integration.
An advanced theory of legal integration was penned by Anne-Marie Burly and Walter Mattli in, “Europe Before Court: A Political Theory of Legal Integration”, World Peace Foundation and MIT (1993). This book advances a theory of interaction of law and politics that draws on both disciplines, explaining the role of European integration as a product of rational motivation and choice. The book stresses that lawyers seek to offer causal explanations, while political scientists try to explain legal phenomena. This theory attempts to explain the legal foundation which has been laid for an integrated European economy and politics, which has managed to transform the Treaty of Rome into a more binding constitution: www.seep.ceu.hu/alpsa/articles/burly(1993).
Pancasila is the basic norm of law in Indonesia and contains basic principles of religiosity, humanity, nationality, democracy and social justice. It is the ultimate sole source of any provision and positive law in Indonesia.
There are reasons to refuse extradition, such as the lack of a double-criminality principle, different regulations on criminal acts relating to political offense or different treatments of death penalty provisions.
The absence of extradition and MLA did not hamper the transfer of Lim Yong Nam, a Singaporean National, to the USA by Indonesia in 2015.
Romly Atmasasmita states that since there is both mandatory and voluntary extradition, in the end the effectiveness of extradition has been diminished. See Romly Atmasismita, “Hukum tentang Ekstradisi”, (Jakarta: Fikahani Aneska, 2011). This view can be seen in the case of Klaus Ernest Heinrich, about whom an extradition request by the Philippines was denied by Indonesia in 2000, despite the existence of an extradition treaty between Indonesia and the Philippines.
MLA has been widely used internationally in modern times as an instrument of legal cooperation under a framework of data sharing, investigation, trial processes and enforcement of custodial sentences. These practices are stipulated in Article 7 of the UN Convention Against the Illicit Traffic of Narcotics Drugs and Psychotropic Substances 1988; Article 7, 18, 27 UN Convention on Transnational Organized Crimes 2000; Article 14, 46, 47, 48 UN Convention Against Corruption 2003.
This literally translates as “agreement must be kept” and is a basic principle in both civil law and canon law and is arguably is the oldest principle in international law.
See Clarification (Penjelasan) Act No.1 of 1979 expressly states that extradition requests are not judicial orders but executive orders.
Political offense, lack of double criminality and the different range of imposed penalties for certain crimes are common grounds for the refusing of extradition requests. See Act No.1 of 1979 Articles 5-17.
See Tom Bingham, “The Rule of Law” (England UK: Penguins Books, 2001), page.117.