Indonesia: No Military or Police Linked to $1.4 Billion Cash Transfers

Indonesian investigators determined that no military or police officers were linked to the transfer of assets valued at U.S.$1.4 billion (18.8 trillion rupiah) from Standard Chartered bank’s branch in Guernsey to Singapore, Jakarta’s tax chief said.

The government instead found that 81 private citizens, mostly businessmen, were involved in the movement of funds, Ken Dwijugiasteadi, Indonesia’s director-general of taxation, told reporters in Jakarta.

“Out of the 81 Indonesian citizens, none of them are from the military, police force, law enforcement agencies or government officials,” Ken said this week, adding they are “purely business people.”

He declined to identify the account holders.

The assets of Standard Chartered’s Indonesian clients were moved in the second half of 2015 before Guernsey adopted the Common Reporting Standard (CRS), a global agreement on exchange of tax and financial information, at the start of 2016, according to Bloomberg News, which first reported the story.

The transfer came to light after authorities in Guernsey and Singapore opened an inquiry following an internal review of the transactions early last year. Employees raised questions about the timing of transactions and flagged disparities between the earnings of some customers and balances in their accounts.

Some of the Indonesian clients, according to the bank’s staff in Guernsey, had a stated annual income of tens of thousands of dollars yet held tens of millions in their accounts, Bloomberg quoted investigators as saying.

It also quoted regulators in Guernsey as saying that some Indonesian account holders “with links to the military were considered politically exposed persons and should have been subject to a higher level of scrutiny.”

The report did not identify the Indonesian military officials.

Ken, the Indonesian tax chief, said his office received the financial data on the suspicious transfers a few months ago from the Indonesian Financial Transaction Reports and Analysis Center (PPATK). Investigators determined that the accounts were owned by private individuals and were mostly linked to each other through family and business ties.

Standard Chartered, which has 87,000 employees in 68 countries, is headquartered in London but does not conduct retail banking in Britain. Most of its profits come from Asia, Africa and the Middle East. The transfer of funds, Bloomberg said, occurred before Standard Chartered closed its office in Guernsey last year.

Guernsey, one of the Channel Islands near the French coast, is a British dependency that has long been used as an offshore tax haven.

Despite the investigation of the transfers, regulators in Guernsey and Singapore have not suggested that bank employees colluded with Indonesian clients to evade taxes, reports said.

Ken declined to comment on whether the Indonesian account holders had suspicious records or ties to crimes or corruption, saying that his office only handled taxation issues.

“Even if there was anything criminal, it would have to be tax-related. Other than that is not within my authority,” he said.