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A new approach to fighting forest crime
Illegal loggers, like drug smugglers, need to launder their profits through compliant banks. While there has been a concerted effort, both nationally and internationally, to clamp down on drug smuggling, those peddling illegally harvested timber have tended to get away with their crimes. But this is beginning to change, and illegal loggers, like drug smugglers, would be well advised to watch their backs in future.
In 2003, Indonesia introduced a law classifying forestry crimes as ‘predicate offences’ for money laundering. This was a direct response to the collaborative research undertaken by CIFOR financial analyst Bambang Setiono and the government’s Reporting and Financial Transaction Analysis Centre (PPATK). The following year, the Asia Pacific Group on Money Laundering invited PPATK to organise a special working group on illegal logging, following a presentation by Setiono and PPATK director, Yunus Husein, at a workshop in Brunei.
During 2005, CIFOR continued to lead the debate on money laundering and illegal logging. In an Occasional Paper – Fighting forest crime and promoting prudent banking for sustainable forest management – Setiono and Husein laid out a comprehensive new approach to tackling illegal logging by using anti-money laundering legislation.
‘Forestry laws alone are insufficient,’ explains Setiono. ‘They tend to catch the small people in the villages, while the big players – the cukong – escape. If we’re going to stop their activities, then we need to make sure they are apprehended when they try to move their profits through the banking system.’ At present it is estimated that 90 per cent of the profits made from illegal logging in Indonesia end up abroad.
The approach advocated by CIFOR and PPATK is having a significant influence on a wide range of organisations, including the World Bank, which funded a high-level workshop on money laundering and illegal logging in Jakarta in November 2005. Organised by the Ministry of Forestry and PPATK, this brought together policy chiefs from heavily forested provinces in Indonesia.
According to Setiono, police in some provinces are now beginning to use the new laws to tackle illegal logging. The banks, too, are asking for help to identify those who are using them as a conduit to channel their illegal logging profits into other (frequently) legal activities. Indonesia is taking the lead when it comes to using anti-money-laundering laws to curb illegal logging. If it succeeds, Setiono believes other countries will follow suit.
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It’s not all the foreigners’ fault
'If you believe what you read in the newspapers, you probably reckon that the smuggling of timber from Indonesia to neighbouring countries, and Malaysia in particular, is a major driver of illegal logging. And it’s not just the mass media that peddles this view, but Indonesian forestry officials, the local timber industry and many non-governmental organisations. ‘You get the impression that if we stopped the timber smuggling, it would dramatically reduce the problem of illegal logging,’ says CIFOR researcher Krystof Obidzinski. ‘But that’s simply not the case.’
In 2005, Obidzinski and colleagues in CIFOR’s Forests and Governance Programme made the first comprehensive analysis of timber-smuggling activities between Indonesian Borneo and Sarawak and Sabah, in Malaysian Borneo. They discovered that the level of illegally traded timber had fallen dramatically over the past two years, largely as a result of a government clampdown on illegal logging. ‘Not long ago 3–4 million cubic metres of illegal timber were smuggled out of Indonesia into Malaysia each year,’ says Obidzinski. ‘In 2005, this had dropped to a million cubic metres.’
A number of measures could be taken to reduce further the cross-border trade in illegal timber – including the elimination of red tape, the streamlining of export licensing and closer collaboration between forestry officials, police and customs – but even at present levels, the trade is relatively insignificant when seen in the context of illegal logging throughout Indonesia. Illegal logging to supply domestic timber industries is far more significant than cross-border smuggling. Clamping down on this should be seen as the priority. |
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