News / Asia

Indonesian Law Aims to Thwart Terror Funds

Indonesian anti-terror policemen stand guard in the business district in Jakarta, September 11, 2011.
Indonesian anti-terror policemen stand guard in the business district in Jakarta, September 11, 2011.
Kate Lamb
Indonesia has passed a new law to thwart the revenue streams of extremist groups. Among other things, the new law gives authorities the power to freeze bank accounts and seize assets, and is expected to help sever funding for radical groups in Indonesia and abroad. 

Analysts say the new legislation is a positive move forward, but does not indicate a major shift in the country’s counterterrorism efforts.
The government needs to modernize its approach to combating terrorism, said Justice and Human Rights Minister Amir Syamsuddin. The new law is about perfecting the country's terrorism laws in line with ratification of international conventions. And as part of the plan the minister said the government must target the "urat nadi," or the financial "veins" of terrorist activities.
But Todd Elliot, a Jakarta-based terrorism analyst for Concorde Consulting said the law is more about emulating G-20 countries than a marked shift in counterterrorism efforts.
“I think in this instance it was more like a symbolic gesture to bring Indonesia in line with other countries, especially G-20 countries that are required to have laws that address terrorism financing," said Elliot. "Most of the terrorist activities in Indonesia are pretty cheap, small-scale and run on cash so I don’t think it would have that much impact on terrorism movements as far as curtailing them.”
While it may not be revolutionary, the law does introduce harsh new penalties. Those convicted of conspiring with others to fund terrorist activities face life in prison. Companies convicted of similar offenses can face fines of up to $10 million.
While Indonesia’s major terror threats have largely been squashed, splinter jihadist groups continue to pose a threat, and they are finding new ways to fund their activities. Last year the police arrested and charged two individuals for accessing money through online hacking and using the funds to finance jihadist activities in Java and Sulawesi. Last week, one received an eight year prison sentence and a $51,000 fine.
The current money laundering and counterterrorism laws are sufficient to cover such cases, said Elliot.

If the government were more serious about a crackdown on radical activities, it would amend the 2003 Counterterrorism Law. But, he said that too has its challenges.
“It is a really, really sensitive issue and there are some religious-based parties that are against it...The counterterrorism agency has actually submitted a draft revision to the house and were supposed to put it on their deliberation list this year, but they said they didn’t have time to get it even though they put on a bunch of other bills that seemed less important or less urgent. It’s kind of like a hot potato that no one wants to deal with," he said. "But everyone agrees that something needs to be done.”
Indonesia has not experienced a large-scale terrorist attack since the twin bombing of the J.W Marriot and Ritz Carlton hotels in Jakarta in 2009.

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