CIFOR Helps Reduce Illegal Cropping

Illegal logging in Indonesia costs the Government up to $3 billion a year in lost tax revenues. Many attempts have been made to solve the problem at the source-in forests-but these have proved ineffective. Now, thanks to pioneering work by Bambang Setiono, CIFOR analyst, big-time illegal loggers have to think long and hard about continuing their destructive practices.

Setiono decided not to tackle the problem at the supply end. Rather, with so much illegal money being generated by illegal logging, he thought it more effective to hit illegal loggers where it hurts-in their bulging bank accounts. Throughout 2003 Setiono worked closely with Indonesian politicians and the Government's Financial Transaction Reporting and Analysis Center (PPATK) to alert legislators about how anti-money laundering laws could oblige banks to report on suspicious transactions involving illegal logging.

CIFOR Director General David Kaimowitz and Head of the Indonesian Government's' Financial Transaction Reporting and Analysis Center Yunus Husein at the signing of a Memorandum of Understanding on fighting illegal logging.

In October 2003, Indonesia became the first country to pass anti-money laundering legislation. CIFOR signed a memorandum of understanding with the Indonesian Government in January 2004 under which CIFOR will provide data, exchange experts, and help PPATK formulate guidelines for financial institutions to identify and prevent money laundering activities.

"Until now Government initiatives to stamp out illegal logging only netted small-scale loggers who were caught cutting down trees illegally," said Bambang Setiono. "The new regulations will help catch the 'Mr Bigs' who work behind the scenes in supporting illegal logging." If properly enforced, the laws could save the Indonesian Government between $1 to 3 billion dollars annually. This money would be a significant boost to the Government's efforts to improve economic development and reduce poverty.

The new legislation and MOU have received widespread support from Indonesian journalists and environmentalists alike. In an editorial, The Jakarta Post wrote: "The partnership between PPATK…and the Bogor-based environmental organization [CIFOR] is quite strategic in preventing illegal logging proceeds from entering the financial system. Since CIFOR is part of a vast network of national and international environmental organizations, it has connections with hundreds of researchers in 30 countries and is adequately funded and staffed to conduct high-impact research, it is capable of assisting PPATK and banks in detecting companies engaged in illegal logging and other forest crimes."

For more information, visit www.cifor.org