FINANCE Minister Paula Cox has been dealt a stinging rebuke after defending Bermuda's reputation as a quality international financial centre.

Responding to allegations by the UK Committee of Public Accounts that the island's record on money laundering was "appalling", Ms Cox explained that Government had a longstanding record of "knowing the customers" and "must and will continue to demonstrate our commitment to improving our national system for combating money laundering and terrorist financing".

But yesterday those remarks were denounced as "poppycock" by one international business expert who said the island's business culture needed to "take a paradigm shift towards ethics and away from corruption".

Accountant Michael Hardy, who has worked as an auditor and manager for a number of insurance and reinsurance companies on the island for 25 years, said: "I read today the usual reply to any criticism on Bermuda's regulation, that we have a great 'know your customer' policy and we are always improving our standards to meet more stringent international standards, or words to that effect. Poppycock!

"Bermuda has not charged or convicted any Bermudian-based individual with any crime of significance in the many international scandals Bermuda companies have been involved in.

"Lawyers claim 'I know nothing' and get away with this blind-eye mentality and complete lack of fiduciary responsibility. Accountants have been sued and paid enormous settlements relating to poor audit professional work. A brokerage company has been scathed for its involvement in pumping stock prices. Local banks have been shown to have bank accounts for individuals linked to criminal activities. Insurance company executives and managers have been involved with reinsurers that have not fulfilled their legal obligations. Tax evasion, fraud, money laundering have all been perpetrated using Bermuda companies.

"Some of these crimes are by household names but they seem to go unscathed in Bermuda. Foreign courts are full of litigation involving Bermuda companies. What of Bermuda courts? What of this new Financial Intelligence Agency constituted a year ago? How does one contact this organisation? Has the fraud investigation unit been amalgamated with this agency and if so how many staff does it have? What kind of detailed review of companies that are still operating with black marks against them is happening right now?

"The 'know your customer' policy has to be reviewed for its effectiveness, including instituting procedures to verify the purpose of the companies setting up in Bermuda. If tax is an obvious reason, then there should be a tax opinion attached to the application. The regulators should continue to monitor the company's owners and its purpose after it has been incorporated and ensure the same owners and business purpose exist.

"This appalling situation has to stop and the old business culture has to take a paradigm shift towards ethics and away from corruption and 'I know nothing' mentality."

Last night the Bermuda Monetary Authority backed up Ms Cox's claims that Bermuda's financial regulations met international standards.

BMA CEO Matthew Elderfield said in an e-mailed statement: "It is evident and unfortunate that the Committee is basing their conclusions regarding insurance regulation in Bermuda on outdated information and an IMF assessment that was conducted five years ago. In that interim period, there have been significant enhancements to Bermuda's regimes for insurance regulation. An IMF assessment conducted last summer is due to be released shortly and demonstrates that Bermuda has a high level of compliance with international standards for financial regulation of the insurance sector, and in many instances exceeds those standards.

"With respect to anti-money laundering, it is disappointing that Bermuda's long-standing Know Your Customer regime has not been acknowledged. It is clear that there has been a major programme of AML work underway over the past year. That work has already resulted in us increasing our resources dedicated to AML supervision at the BMA; revisions to legislation that will increase our powers in relation to AML enforcement; and the creation of the Financial Intelligence Agency to strengthen Bermuda's supporting infrastructure for combating money laundering. This programme continues, with new legislation being published for consultation today.

"The BMA, along with all the relevant authorities here, remains committed to continuing the process of enhancing Bermuda's framework for financial regulation and maintaining the highest levels of consistency with international standards."