The Proceeds of Crime Act may discourage legitimate international businesses from setting up in Bermuda, a lawyer has claimed.

And although the intent of the legislation -- now before the House of Assembly -- is laudable, the steps taken to bring about the changes the bill envisions could cause more problems than they prevent.

Lawyer Timothy Marshall made these statements in a speech to the Pennsylvania Bar Association last Friday.

He said Bermuda was like many other "tax havens'' who have had to respond to concerns in the United States and Britain that money laundering was occurring in their banks and deposit companies.

And Parliament recognised that the present legislation worked to the advantage of criminals because Police and other authorities are often hamstrung when they attempt to investigate suspected offenders.

But he argued that in order for authorities to investigate potential money launderers, many of the characteristics which make Bermuda attractive to offshore clients will be compromised.

"While the objectives of the new Proceeds of Crime Bill are commendable,'' he said. "...the measures taken to achieve those objectives under the bill are highly controversial (because) they challenge many notions that we have always considered to be fundamental democratic principles of law.'' Among those Mr. Marshall included are the right to be presumed innocent until proven guilty, the right to remain silent, the right to a fair trial on the evidence and the right not to be deprived of one's property without due process.

For international business enterprises, Mr. Marshall said the proposed legislation allowed taxing authorities from foreign lands to conduct "fishing expeditions''.

This could come about because the bill requires industry insiders to report "suspicious'' circumstances to Police.

And the Police only require "reasonable grounds that a person is engaging in criminal conduct'' to launch such a probe. Once begun, detectives do not need to say in detail what infraction their investigation is expected to uncover.

"The potential for abuse raises a number of other concerns as well which are related to the enforcement of penal and revenue laws,'' he added. "In my view the ability to register and enforce foreign confiscation orders made on suspicious circumstances provides an indirect enforcement mechanism for the tax and penal laws of a foreign country.'' Other issues of concern Mr. Marshall pointed to were the ability of the Police to investigate, detain the cash and search persons and property on the basis that an officer has a "reasonable ground to suspect'' that a person has committed or has benefited from criminality.

Mr. Marshall said that in its attempt to stamp out any perception that money laundering was occurring in Bermuda, the Proceeds of Crime Bill may discourage legitimate business.

"Both real and perceived concerns about lack of confidentiality and bank secrecy as well as the home jurisdiction's potential ability to use the bill to conduct tax audits and investigations will no doubt make international business think twice about coming to Bermuda,'' he said.

HOUSE OF ASSEMBLY HOA CRIME CRM