Bermuda had the earliest version of Know Your Customer (KYC) policy in the world and that is one of the reasons why it now enjoys a high standing as one of the world's leading financial centres.

It is more than 50 years since that KYC policy was introduced on the Island. And while it has served Bermuda well, it is imperative the Island keeps up to date with all the latest international regulations to safeguard its high standing.

Bermuda Monetary Authority CEO Cheryl-Ann Lister underlined that as she addressed Hamilton Rotary Club and focused on new anti-money laundering legislation being introduced.

"The Financial Action Task Force (FATF), one of several international standard-setting bodies that basically establish the global 'benchmarks' for financial services regulation, sets those standards,"said Mrs Lister.

"The international standards for combating money laundering and the financing of terrorism are the FATF Forty Recommendations and the FATF Eight special Recommendations on terrorist financing. It is against these standards the International Monetary Fund (IMF) evaluates jurisdictions in its ongoing assessments of financial centres to determine their compliance with international regulatory standards."

When the IMF visited Bermuda in 2003 it identified weaknesses in the Island's regulatory framework for combating crime and terrorism financing. The IMF is currently re-assessing Bermuda and is doing so as new legislation comes into force to deal with some of the issues raised in 2003.

Summarising changes to Bermuda's Proceeds of Crime Act, Financial Intelligence Agency Bill and money laundering regulations, Mrs. Lister said there would be an increasing of the scope of powers for the police to search business premises for anti-money laundering purposes and an increase in scope for the provisions on money laundering offences.

The BMA will gain statutory authority to monitor compliance with anti-money laundering legislation, and the scope of money laundering regulations will broaden to include the legal and accounting professions, for specific types of transactions conducted on behalf of their clients.

Of the Proceeds of Crime (Money Laundering) Regulations 2007, Mrs Lister said: "It is proposed that, in addition to corporate service providers, the Act will now also apply to lawyers and accountants, when they are dealing with specific types of transactions on behalf of their clients, such as buying and selling real estate, managing client monies, securities and other assets, or management of bank, savings or securities accounts.

"The regulations will also facilitate a risk-based approach to customer due diligence by institutions, which basically means applying even greater levels of scrutiny and vetting to customers that present higher potential risk profiles.

"It will also prohibit the use of shell banks and anonymous accounts in Bermuda, formalising in policy what has already been long-standing practice."

She said the Financial Intelligence Agency Bill establishes an independent administrative body to work alongside the police to combat money laundering.

The BMA has been monitoring the compliance of financial institutions to anti-laundering legislation but the changes in law now gives the BMA formal rights to do so and therefore the ability to enforce measures against firms that do not comply, explained Mrs. Lister.

"Anti-money laundering provisions support Bermuda's hard-earned position as a world-class financial centre," said Mrs. Lister.

"Whether combating money laundering or conducting the broader business of regulation, the BMA, like the jurisdiction, operates in a fast-paced, dynamic international regulatory environment."

Returning to the subject of Know Your Customer, she said: "We are proud of our reputation to adherence to KYC and we have benefited from that and should continue to do what is right. Bermuda had in place the earliest system of KYC — it was put in place just after World War Two — so we knew who was coming to do business in our jurisdiction and that has benefited us; look where we are today."