Investment funds which suffered big losses as a result of exposure to Wall Street money manager Bernard Madoff's alleged $50 million 'Ponzi scheme' fraud could be victims or enablers of the scandal which rocked the financial world.

That is according to Matthew Elderfield, CEO of the Bermuda Monetary Authority, who was speaking to industry professionals at the unveiling of the Authority's 2009 Business Plan yesterday.

Meanwhile, he revealed that the BMA had added Harvest Investment Holdings Ltd., a company run by Andre Curtis, the branch chairman of Premier Ewart Brown's Progressive Labour Party constituency, to the warning list on its website as not being licensed by the Authority to conduct regulated business.

He said the BMA had been working with the Bermuda Police Service regarding concerns that the business may have committed an offence under the Investment Business Act 2003 and had sought and subsequently obtained a search warrant for certain premises, which had been executed by the Police, with a BMA officer present, and inquiries into the matter were ongoing.

Mr. Elderfield said, to the best of his knowledge, there were no Madoff funds in Bermuda and that the billionaire investor did not have any funds based on the Island.

But he added there were a number of funds that were based in Bermuda which had lost money due to their investments in Madoff and that the Authority was trying to work out which funds they were and how much exposure they had.

"We need to assess whether all of those funds were victims or were some enablers," he said.

Mr. Elderfield said the two investment funds known to have suffered heavy losses, Fairfield Sentry Ltd., run by Fairfield Greenwich Group, and the $2.8 billion Kingate Global Fund Ltd, run by Bermuda-based Kingate Management Ltd., were not licensed or regulated by the BMA, but Fairfield was regulated by the US Securities and Exchange Commission.

He said the extent of investment funds' exposure to Madoff was yet to be determined as a result of court actions, civil law suits and investigations, but added that the Authority would work with other jurisdictions as required, having contacted the SEC last year to offer its help with investigations into Madoff.

Mr. Elderfield said some of the aspects of the BMA's regulatory regime had held up well because of the checks and balances in place to hold businesses to account. The need for a fund administrator for the hedge funds, which Madoff did not have, is required of Bermuda-registered funds.

The CEO added there were a number of companies which were exempt from regulation and supervisory oversight, some of which supplied Madoff with funds.

The Authority's first annual meeting started with Mr. Elderfield giving an overview of the business plan in terms of managing the financial crisis, focus on mutual recognition, implementing new anti-money laundering standards and improving operational efficiency.

He said the plan, which was only the second of its kind, would aim to build on the success of the previous year's one.

"In common with other financial services regulators, 2008 was a particularly challenging year for the Authority, given the need to both manage the prevailing financial crisis and maintain our focus on our regulatory agenda," he said.

"This year we face the same challenge, as the financial crisis moves into a new phase, with a broader impact on the economy."

Mr. Elderfield, who was joined by the BMA's executive committee, said the new plan would help the Authority to respond to the crisis as it unfolds, such as implementation of the Basel II Accord for banks and some investment businesses and further improvements to its solvency framework for insurers.

The plan, he said, would focus on mutual recognition with the Europe and US markets, in particular with insurance regulation, to maintain Bermuda's competitiveness and allow the Island's companies to do business with international markets on non-discriminatory terms and avoid duplication on regulation and capital charges.

He said that the BMA now had broader supervisory and enforcement powers for anti-money laundering and anti-terrorist financing as a result of legislation enhancing its provisions being enacted in late 2008 and would shift from policy making to on-site reviews of anti-money laundering standards, leading to feedback to the market and follow-up enforcement, if necessary.

Furthermore, the Authority would publish service standards concerning specific regulatory transactions for the first time and would report on the performance against those standards in future annual reports, said Mr. Elderfield.