In a report based on its mission to Bermuda in 2006, which was released last month by the Caribbean Financial Action Taskforce (CFATF), the IMF concluded that there has been little legislative change since the AML laws and Guidance Notes (GNs) were brought into force in 1998, and the last IMF assessment in 2003.

"Apart from a few changes to the Proceeds of Crime Act (POCA) and the GNs, the only significant new legislation enacted was the Anti-Terrorism (Financial and Other Measures) Act 2004 (ATFA). New draft GNs, prepared soon after the last IMF mission, are still to be finalized and implemented," the report noted.

"The current AML/CFT regime has, therefore, not kept pace with changes in the FATF Recommendations, and the authorities have been slow in implementing a number of key recommendations from the last IMF assessment, particularly with respect to the reporting entities in the financial and non-financial sectors," it added.

While observing that the criminalization of money laundering and terror financing is "generally comprehensive", with offenses applying to both natural and legal persons, the IMF found difficulty in assessing the effectiveness of the legal framework because there have been limited money laundering investigations, and only one prosecution for this offence in the last five years. Meanwhile, there have been no investigations into suspected terror financing.

However, the IMF took account of the fact that several pieces of new legislation were under consideration by Parliament to address a number of weaknesses in the regime at the time of the mission in 2006, and these were enacted in June 2007. The updates include amendments to the Proceeds of Crime Act, the Criminal Justice International Cooperation (Bermuda Act), and the Financial Intelligence Agency Act (FIA Act) to establish an administrative financial intelligence unit.

"Once implemented, these new laws will address a number of the weaknesses in the AML/CFT legal framework identified by the mission," the IMF observed.

Despite the report's highlighting of shortcomings in Bermuda's AML/CFT laws, the jurisdiction's government welcomed its conclusions, and Finance Minister Paula Cox responded that the island "has nothing to be ashamed of".

"The Government of Bermuda recognises the important international role that it must maintain to safeguard the security and economic well being of Bermudians and people of other nations from the global threat of organised crime and terrorism," Cox said in a speech commenting on the IMF report.

She went on to add that the government "is committed to completing the process of updating Bermuda's AML/CFT regime to reflect the most recent developments in financial crime and the revised international standards from the FATF".

"Our objective in Bermuda is to establish and maintain oversight arrangements that are transparent, consistent with international standards, suited to the risk profile of our industries and effective in encouraging prudent conduct and high standards of corporate behaviour," Cox stated.