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The craft of creating a lasting reputation

Reputation, reputation, reputation is the mantra for countries seeking high-grade foreign investment. We, in Bermuda, want to do business with the best of the best: countries and companies with impeccable reputations for transparency, fiscal solvency, rigorous enforcement of compliance measures, and legislation to combat corruption and financial crimes.

In our besieged economic situation, there is urgent impetus for Bermuda to increase the Bermuda Business profitability model into the future. Bermuda, also, cannot afford to accept anything less than the very best business partners. Our island reputation is what we are, what we stand for, and how we are perceived on an international scale. Our reputation has generated the best in the past and will continue to do so if we maintain it for the future.

The newly merged reformed Bermuda Business Development Corporation, Bermuda, with the hiring of Mr Stephen E Lund, has launched a full-scale promotion to attract new business, while maintaining continued focus on improved relationships with our current valuable international industries.

Mr Lund has been the CEO of Nova Scotia Business Inc (NSBI), Nova Scotia, Canada's business development agency, since its creation in 2001. NSBI has attracted some of the top companies in the world including IBM, BlackBerry, CITCO, Marsh and Lockheed Martin while exceeding its goal of helping generate $800 million in direct client payroll during its most recent five-year strategic plan period 2007-2012. During this time, NSBI achieved $1.2 billion in direct client payroll and generated a 43 percent return on investment for Nova Scotia under Mr Lund's leadership. An important aside here is that increasing Bermuda Government payroll tax revenue will go a long way to a positive first step in reducing Bermuda's long-term debt owed to foreign investors.

What are the criteria for the best of the best in international financial centres?

We do not have to tout ourselves. Let us instead hear it again from a seriously committed influential executive, Mr Tommaso Mascarucci, president of Black Gold Re Ltd, the Bermuda-based captive of Colombian oil giant Ecopetrol. Speaking in a session on the Island's suitability as a domicile for Latin American captives at the Bermuda Captive Conference on June 6, 2012, Mr Mascarucci said Ecopetrol had thoroughly vetted 11 potential domiciles before plumping for Bermuda. “One key focus for us was reputation. A good domicile will have a good legal framework, so the rules you have to follow are clear. Ecopetrol's evaluation of Bermuda found the Island had transparency and regulatory stability, was favoured by the Organisation for Economic Cooperation and Development (OECD), had world-class service providers and easy access to reinsurance, and was also home to other captives in the oil and gas sector.”

How do we stand with some of those compliance agencies — the experts that have measured, monitored, and reported on Bermuda for a long, long time?

Transparency International: our low-corruption country score is right up there next to the United States, France, Canada, and the United Kingdom.

Standard and Poor's sovereign rating agency: Repeating recent news, Bermuda is still rated in the AA- range, a very high score on the overall credit charts.

United States State Department Money Laundering Report 2013 for Bermuda, while not perfect, is very acceptable — with no sanctions, and very “few high risk marks”. There is still room for improvement by increased compliance measures and conflicts of interest reporting on PEPS Politically Exposed Persons, i.e. Bermuda politicians / related individuals while domestic money laundering is problematic. The report states as follows, http://www.knowyourcountry.com/bermuda1111.html

There are no enhanced due diligence procedures for domestic politicians and politically exposed persons.

?“There is no known (international) money laundering/terrorist financing (ML/TF) activity through free trade zones, or money or other value transfer services in Bermuda. However, there have been cases where domestic criminals have utilised the formal financial sector for money laundering purposes, it is believed to be principally related to the domestic drug trade. Money laundering proceeds are controlled primarily by domestic gangs, which have proliferated in recent years.

Know Your Client (KYC) covered entities: Banks, trustees, securities brokers and financial management firms, long-term insurance companies, money service businesses, insurance managers and brokers, fund administrators, investment fund operators, and independent legal advisers and accountants who are members of the Bermuda Bar Association and the Institute of Chartered Accountants of Bermuda.

However, I note that Bermuda boat and car brokers, jewellers, along with real estate principals and agents are not included in the KYC list for Bermuda, a point that is extremely topical given the current property (LLC-ownership) money-laundering fiasco rampant in Miami. See South Florida Business Journal August 30, 2013 by Brian Bandell.

Who will keep Bermuda fully compliant? Tightening up our ship is the mandate of the Compliance Officer, a vitally important and integral employee now of every international organisation.

The role of the Professional Compliance Officer in every spectrum of domestic and international business has increased exponentially in scope and authority in just few short years. Compliance professionals now occupy top roles in governments, military, and industry carrying enormous responsibility, literally for the health (and sanctity) of organisations in risk management areas: Data privacy, tax, legal and regulatory compliance, IT services, risk crisis management, internal control monitoring, fraud detection and processes to combat hostile (criminal) assaults on internal / external business mechanisms and systems (electric/utility grids/ nuclear / water, etc.).

The Professional Compliance Officer roles require specialised training and experience. Various education groups have evolved to serve this new market in the basics and advanced degrees such as the innovative (fully online interactive) Masters of Science of Law graduate degree for both attorneys as well as non-lawyers with five concentrations, one of them International Compliance and Risk Management. The curriculum has been offered for more than then seven years by Thomas Jefferson School of Law (TJSL), San Diego. Graduates include top professionals in law, accounting, tax, finance, government, and trade industries across the globe, while teaching Professors are highly regarded globally-known legal professionals who operate in the real working world, along with their commitment to education. http://www.tjsl.edu/graduate-programs/online

Bermuda wants to increase international business, but we can never, even by implication, send a message that Bermuda will do business at any cost, and at any price. Our government must be cautious and ever vigilant. Bermuda cannot rest on her (and our) reputational laurels; we must continue to increase, refine, and upgrade our compliance procedures, anti-money laundering laws, corruption prevention, and good corporate governance legislation.

Only the best of the best for Bermuda!

Announcement: Bermuda Inaugural Financial Crime and Compliance Seminar will be Bermuda's finest financial crime and compliance opportunity for incomparable executive networking and global intelligence, and in 2013, yCompliance expects to host more than 200 government officials and financial industry decision-makers at the Fairmont Southampton over the course of the day.

For details, contact Mr Shea Smith, Seminar Committee at info@compliance.com 705-3706 and review the site at http://www.ycseminars.com/

Martha Harris Myron JP CPA PFS CFP is a Bermudian journalist and a cross-border financial planning specialist focused on offshore financial perspectives for international citizens living, working, crossing borders, and straddling ponds in the North Atlantic Quadrangle: United States, Canada, United Kingdom, Europe, and the island of Bermuda, the premier international finance centre.

President of Pondstraddler? Life™ Consultancy.

Publications, Presentations and Seminars. www.pondstraddler.com inquiries to info@pondstraddler.com

The newly merged reformed Bermuda Business Development Corporation, Bermuda, with the hiring of Mr Stephen E Lund, has launched a full-scale promotion to attract new business, while maintaining continued focus on improved relationships with our current valuable international industries.

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Published September 21, 2013 at 9:00 am (Updated September 20, 2013 at 6:11 pm)

The craft of creating a lasting reputation

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