Bermuda's big business yesterday forecast storm clouds on the economic horizon if UK plans for tougher financial regulation in its colonies are allowed to cripple the Island's banking and offshore industries.

And David Ezekiel, Chamber of Commerce chairman of the International Business Division, warned against Bermuda giving too much power to outside bodies to probe Island-based firms "on a whim.'' He was speaking after UK Foreign Secretary Robin Cook -- as predicted by The Royal Gazette -- dangled the carrot of full UK citizenship for the Dependent Territories.

But Mr. Cook also waved a big stick -- a checklist of measures to avoid a flow of dirty money and enforce financial regulations to UK and EC standards to be put in place by 1999.

Mr. Ezekiel said: "Some of the noises are ominous -- if one were to look at it from the point of view of what is requested of us it will need very, very careful looking at.'' He added: "Bermuda is a very reputable domicile and the danger is that there will always be domiciles to which this business can go if we ourselves impose, or allow to be imposed, unreasonable standards.

"If we require much too much from our banks and financial institutions before they can do business, the risk is our clients will go elsewhere, where they can have their business transacted in a speedy and efficient manner.

"We are not just in competition with other Dependent Territories, we are in competition with the world.'' Mr. Ezekiel added if over-regulation crept in "we might have a problem, but I don't think we are stupid enough to allow that.'' Mr. Cook also asked for "genuinely independent'' regulatory authorities -- financed by the financial industries themselves if necessary.

But Mr. Ezekiel said the Bermuda Monetary Authority and the Bermuda Stock Exchange already provided a "reputable and well-organised structure'' to regulate banking and financial services.

Bermuda Commercial Bank managing director Peter Roberts said: "Bermuda shouldn't feel it has anything to fear from being held to the highest international standards of business conduct -- it prides itself on that.'' He added the Island ran its financial affairs through expert staff who knew their customers and operated on a high level of trust, combined with already-strong oversight.

Mr. Roberts added that a high level of bureaucracy did not necessarily mean a low level of dirty dealing.

And he said: "We have to distinguish between effective regulation and bureaucracy, whose functions lie outside the search for integrity.'' He added, however: "The concern will be that God -- or the devil -- will lie in the detail... we will reserve our judgment until we get some idea of what the details are.'' A spokesman for the Bank of Bermuda said it could not comment until specific details are known -- and echoed the view that the Island was well-regulated.

The Bank of Butterfield and the Bermuda Monetary Authority declined to comment until further details are known.