Critics around the world should stop pointing the finger at offshore financial centres and get their own houses in order, according to the president of the Association of Bermuda Compliance Officers (ABCO).

Owen Reid said the world’s biggest money-laundering cases had taken place in venues such as New York and London, yet the perception remained in some quarters that offshore centres were “black holes” for the proceeds of crime.

Mr. Reid’s comments came as he discussed ABCO’s two-day Bermuda Compliance Summit, featuring expert speakers on compliance and anti-money laundering measures, to be held at the Fairmont Southampton Princess on June 4 and 5.

“There is not a level playing field between onshore and offshore,” Mr. Reid said. “If you are offshore, some people will always say you are a black hole for laundered money.

“But let’s look at the facts. All major money laundering cases of recent years have featured money that was held onshore. It’s much easier to hide a Sherman tank in London or New York, than it would be if you stuck it under a palm tree in Bermuda.

“Likewise, if you drop a couple of million in Bermuda, it’s noticed immediately, but in London or New York, it’s easily absorbed.

“Even when Bermuda has been involved with some questionable individual, the funds have always been wired from onshore. Onshore is the problem and it needs to clean up itself. They are constantly pushing us to clean up, but at the same time they’re dragging their feet over what they need to do.

“It took 9/11 for the US to adopt the Patriot Act and anti-money laundering and terrorism funds legislation that offshore jurisdictions had had for years. The perception does not go with the facts.”

Businesses, such as insurance companies, had come to Bermuda to deal with a more straightforward regulatory structure, as opposed to the “overly bureaucratic” regulations they would have to deal with elsewhere. For example, nation-wide US insurers had to deal with 50 insurance regulators, one in each state, rather than a single set of rules for the nation, Mr. Reid said.

A few weeks ago, an article in Forbes magazine described Bermuda as “the grande dame of pirate destinations” for those with money of dubious origin — without citing a single example.

Bermuda was constantly battling against such negative perceptions, Mr. Reid said, and it was imperative that the Island ensured it had a “corporate culture of compliance” to safeguard its reputation and future as a global financial centre.

New rules on compliance will impact on Bermuda businesses in the coming months and the summit in June will offer advice on the changes and how to comply with them.

With representatives of the International Monetary Fund paying a visit to Bermuda next month to check on compliance standards, the Island’s reputation is at stake.

New legislation, which will widen the scope of the requirement to report any suspicions of money-laundering to the authorities, is expected to be passed during the next session of Parliament. So not only will banks have to report suspicious financial activity by law, but so will lawyers, accountants and brokers, for example.

Those changes will include the beefing up of the Proceeds of Crime Act and the formation of a new authority that will deal with reports of suspected money laundering, the Financial Intelligence Agency (FIA).

Bermuda needs a team effort on compliance to ensure a good reputation with authorities like the IMF and for future success as a jurisdiction, Mr. Reid added.

“The whole community can get involved in compliance — it’s not just about the financial institutions,” Mr. Reid said. “For example, jewellers, real estate agents and car dealers should all be prepared to report suspicious cases.

“If someone steps off a cruise ship and wants to buy a $10,000 piece of jewellery for cash, then the jeweller should be asking questions and reporting it as suspicious.

“And if someone who is unemployed goes to a car dealer and pays $60,000 in cash for a new car, then the dealer has to know there is something wrong there.”

Compliance has become a veritable growth industry in recent years, particularly since the corporate scandals surrounding the likes of Texas-based Enron, which cost shareholders, pensioners and employees billions of dollars.

International standards of good corporate governance have since been tightened around the world and many large organisations employ compliance officers.

“I came to Bermuda in 1995 and at that time compliance was a novelty concept,” Mr. Reid said. “Four years after that I got together with other like-minded people and we formed the Association of Bermuda Compliance Officers.

“We have seen an explosion in the need for qualified staff and we need to get people trained,” Mr. Reid said. ABCO works closely with the International Compliance Association in the US and the UK-based Association of Certified Anti-Money Laundering Specialists to help with training and updated information.

Among the speakers will be two members of the Egmont Committee, chairman William Baity and chairman of the group’s Training Working Group, Neil Jensen. The Egmont Committee is an international anti-money laundering association, made up of representatives from Financial Intelligence Units (FIUs) from more than 100 countries. Bermuda is about to join it.

Overseas speakers will include Peter German, a former director of financial crime with the Royal Canadian Mounted Police, and Scott Davis, of the US State Department.

Content of the two days will include practical advice on how organisations can implement their own compliance measures.

Around 80 people have registered so far for the conference. More information is available on the internet link http://www.abco.bm/conference.html.