Indonesia's government initiative to establish family offices in a bid to attract global wealth has sparked concerns among experts about the potential risks of money laundering. The controversial policy aims to encourage foreign investors to bring capital into the country, but critics argue that it may inadvertently facilitate illicit financial activities.

A social welfare expert from the University of Indonesia, Rissalwan Habdy Lubis, expressed alarm over the policy, stating that it could potentially exploit family offices for money laundering. "In both Indonesian and international legal frameworks, family offices pose significant risks due to their potential for facilitating money laundering under the guise of attracting foreign investment," Lubis said in an interview with Kontan.co.id on November 23.

Lubis emphasized the need for caution in the government's approach to attracting foreign investors. While foreign capital is undoubtedly crucial for economic development, Lubis stressed that the government's strategy should not just focus on securing funding but should also prioritize the long-term welfare of the Indonesian people.

"Beyond the threat of money laundering, the more insidious risk is the social inequality created by fictitious economic activities. If the government inadvertently enables such practices, it could worsen the gap between the rich and poor," he warned. The family office structure, he argues, could unintentionally perpetuate wealth inequality by enabling financial operations that don’t contribute to the real economy.

The family office initiative is tied to the Omnibus Law, or UU Cipta Kerja, a sweeping piece of legislation aimed at improving the ease of doing business in Indonesia and attracting foreign investment. Lubis believes that the family office concept is a natural extension of these policies, which are heavily tilted toward benefiting investors. "This phenomenon of family offices is a logical consequence of the Omnibus Law, which prioritizes investor interests over local businesses, especially small and medium-sized enterprises (SMEs)," he said.

He also referenced international examples, such as Singapore, where family office regulations have been linked to money laundering scandals. In light of this, Lubis questioned the wisdom of introducing similar structures in Indonesia, a country still grappling with issues of corruption, tax evasion, and financial crimes. "If money laundering is already a concern in Singapore's family office model, the risk in Indonesia could be even higher," he warned.

The Indonesian government is currently reviewing the family office policy, with plans to involve state-owned investment firms in the process. Family offices, by definition, are financial entities established to manage the wealth of ultra-high-net-worth individuals or families. While they offer wealth management services, they are also criticized for being potentially opaque, providing opportunities for illicit financial practices to go undetected.

Despite these concerns, the Indonesian government appears committed to pursuing this policy as part of its broader strategy to attract foreign capital. However, experts like Lubis insist that without proper safeguards, the risks of enabling financial crimes outweigh the benefits of increased investment. The challenge now lies in finding a balance between fostering investment and ensuring financial integrity.

KONTAN