Bermuda and the Caribbean Overseas Territories are progressing on improved financial regulation, according to the UK Treasury and Foreign Office.

In a press statement released late last week, the Foreign and Commonwealth Office (FCO) said the six Overseas Territories had published reports setting out the steps they had taken to implement recommendations made in the KPMG review of their systems for regulating financial institutions.

This is the second series of detailed reports by the Overseas Territories on implementation, following their endorsement of the main elements and recommendations of the KPMG report.

The KPMG report followed the UK Government presenting a White Paper in 1999 "Partnership for Progress and Prosperity: Britain and the Overseas Territories", in recognition that a number of the overseas territories had developed successful offshore financial sectors."

In order to ensure that the "reputation for honest administration and probity be preserved and enhanced", the UK Government appointed accounting firm KPMG to conduct a review of the Caribbean Overseas Territories and Bermuda.

In a joint statement last week Economic Secretary to the Treasury Ruth Kelly and Foreign Office Minister for the Overseas Territories Baroness Amos said: "Better financial regulation is important in ensuring that Britain's Overseas Territories maintain their status as important financial centres.

"We congratulate them on the progress they are continuing to make in implementing the recommendations in the KPMG report to improve standards of financial regulation."

The Territories - following the recommendations of the KPMG Report - have focused on several specific areas. These were the adoption of comprehensive anti money laundering legislation, setting up independent regulatory authorities - which the CFO reported are up and running in Bermuda, British Virgin Islands, Montserrat and Turks and Caicos Islands.

And that, as recommended, all the Overseas Territories, apart from Anguilla, have taken the necessary compulsory powers to obtain information about regulatory issues and share it with foreign regulators.

In addition, Bermuda will be taking powers to compel unregulated persons and bodies to provide such information to the authorities on the same basis as regulated financial institutions.

The FCO reported further: "We are also glad to see that the Overseas Territories have turned their attention to other recommendations in the Report. For example we welcome the new Trust Act recently adopted in Bermuda. We note that all the Territories have set out ambitious plans to pass further legislation and adopt further regulation and we urge them to enact such measures speedily. As well as legislative measures it will be necessary to provide the necessary human as well as financial resources to the new institutions so they can operate effectively."

The FCO also reported that visits to the Territories by the International Monetary Fund (IMF) will take place in the last quarter of 2002 as part of their financial sector assessment programme. This will reportedly provide an independent assessment of the Territories progress towards achieving international standards of financial regulation.