Bermuda Hits Back At Canadian ‘Secrecy Haven’ Reports

by Mike Godfrey, Tax-News.com, Washington

20 January 2005

The government of Bermuda has hit back at reports in the Canadian media alleging that a Bermuda-based investment firm has managed to evade information requests from North America regulators because it is based in a “secrecy haven.”

According to a Royal Gazette report, the controversy surrounds asset management and brokerage firm Lines Overseas Management (LOM), which the British Columbia Securities Commission alleged last May had failed to identify the beneficial owners of securities traded by LOM (Holdings) Ltd., LOM Securities (Bahamas) Ltd., LOM Securities (Bermuda) Ltd., LOM Securities (Cayman) Ltd.

Subsequent reports in the Canadian media suggested that the Commission was unable to obtain ownership information from the LOM companies because they were “located in secrecy havens” where “once an account is opened, it can be used by hundreds of individuals whose identities are known only to the offshore brokerages offices”.

However, the Royal Gazette revealed this week that a Bermudian finance ministry spokesman has sought to dispel the media comments, remarking that the reports “demonstrate a lack of knowledge and understanding about Bermuda’s supervisory regimes for financial services”.

“Financial institutions in Bermuda are subject to rigorous KYC requirements under the Proceeds of Crime Act and Regulations (POC) which are fully consistent with the standards imposed on institutions in other well-regulated centres,” the finance ministry spokesman pointed out.

He continued:

“In addition, investment providers are required to maintain adequate accounting and other records of their business and adequate systems of control of their business records in order to meet their obligation under the Investment Business Act 2003.”

“To say, as has been reported in several recent articles, that LOM ‘may be acting as a front for undisclosed investors’ is entirely misleading, and makes a completely legitimate relationship sound sinister and improper.”

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