US regulators have adopted a "do as I say, not as I do" approach to offshore banking, says Bank of Butterfield's new president and CEO Alan Thompson.

Speaking at the weekly Hamilton Rotary meeting yesterday, Mr. Thompson said that in an era of international scrutiny following September 11 and the Enron debacle, Bermuda's know your customer approach in the banking industry was good for the Island's reputation and ultimately the success of the Island's banks.

He said the Bermuda Monetary Authority (BMA) was a very professional organisation whose regulators were up to speed with best practices and added: "It is critical for regulators and banks to operate in an environment that is up to speed."

As an example of Bermuda's increased regulatory efforts and the know your customer philosophy, Mr. Thompson said he was recently having lunch with a former chairman of the bank who said he had been sent a letter from the bank requesting some additional information and saying he would require picture identification even though his portrait was hung in the bank.

"Perception is very important," said Mr Thompson who said that while some people may not like the increased scrutiny, it was entirely necessary to ensure a well regulated jurisdiction.

Mr. Thompson said that although he had an account in the US, he had never been asked to supply any information about himself even though he was making transactions from Saudi Arabia and Bermuda which may be perceived as dodgy jurisdictions.

He said it appeared the US regulators had adopted a do as I say and not as I do attitude when it came to the regulation of foreign jurisdictions.

Mr. Thompson said there had been lots of negative Press about Bermuda on issues relating to tax, money laundering and accounting practices but said: "It has become a very emotive issue."

He added: "There is a lot of rhetoric coming out of Washington that is not very objective."

As a parallel, Mr. Thompson said following September 11, when he was still in Saudi Arabia, there was a huge amount of negative Press about money laundering in the country. However, Mr. Thompson said the reality was that regulators in Saudi Arabia worked with regulators in London and the industry was very closely monitored and regulated.

And concerning Bermuda, Mr. Thompson said: "Bermuda is in the eye of the storm right now. We need to be candid about the facts and address them."

He said more communication and discussion about the facts would be good for the Island and he hoped this would help the storm blow over.

When asked by a Rotarian if the Island was too regulated to the detriment of competitiveness, Mr. Thompson said he felt the Island was not overregulated at all.

"In today's environment, it is a plus to have a strict regulatory environment. It will become a competitive advantage to operate in a jurisdiction with a good regulatory framework."

Only four months into his new job, Mr. Thompson said he had thoroughly enjoyed his time so far in Bermuda and was looking forward to his wife and two children coming to join him at the end of this month. His third daughter may visit the Island on occasion but is spending more time in Hollywood where she works as an actress. Having lived and worked in North and South America, the Middle East and Asia, Mr. Thompson said Bermuda was one of the nicest places he had been and commented on the friendliness of the people.

Mr. Thomson concluded: "We are fortunate to be headquartered in an excellent jurisdiction with capable people and a strong, well developed economy. Despite international economies, Bermuda is well positioned for a bright future - if we continue to do what we are doing well, and try to do it better."