The Bermuda Monetary Authority is set to get more wide-ranging powers that will allow it to crack down on fraudsters and scammers with the passing of the Investment Business Act.

The weighty act was laid before the House of Assembly last Friday and will give the BMA more muscle to police the Island?s investment community.

?There is a lot of scamming and fraud stuff around, and some are either using Bermuda or targeting Bermuda,? said Munro Sutherland, the BMA?s superintendent of banking, trusts and investment. ?This will tighten up the scope and power of the BMA to intervene.?

If it goes ahead through Parliament this session, it will be expected to be put into place in the first quarter of 2004, according to the BMA.

?In essence the act protects the retail investor and allows exceptions to the act,? he said. ?The act is much better and more modern. It allows us to get information and to intervene.?

He added that the act gives the BMA more power to act in cases of suspected fraud or wrongdoing when it comes to investments, which is more in line with the new powers given to the BMA in other acts.

?In addition we will have the power to police the perimeter,? he said. ?That means we can ask questions if we are not sure they are doing investment business.?

And he said that this was in line with new banking laws which allowed the BMA powers to look into cases of suspected wrongdoing.

There are currently 52 licensed players in the investment community who target the general public. Other investment companies that deal with high net worth individuals and institutional investors apply for an exemption to the act. But the old act left grey areas which had lawyers scratching their heads about whether it applied to the special investment vehicles they were setting up for their clients.

?What the new act does is it clarifies quite a lot of problems on the margins of the act,? said Mr. Sutherland. ?So it will not really matter to the licensed players, but will be more important to the legal community. It was the lawyers pressing for clarity.?

Mr. Sutherland went on to explain that the wording of the old Investment Business Act were very wide and were not meant to cause such concern with the setting up of special investment vehicles. The act will also bring Bermuda more in line with international standards and keep the Island in line with KPMG and International Monetary Fund guidelines.

?This deals with a list of things that they use and they can tick all the boxes. In a number of respects the 1988 act clearly does not allow them to do this,? said Mr. Sutherland.

The act will also make the BMA the watchdog for all stock exchanges on the Island. It is already in charge of the Bermuda Stock Exchange, but the changes in the act would mean that if any new exchange set up, it would also be regulated by the BMA.

Mr. Sutherland said that at the moment there was no interest in setting up a new exchange, but in the past the Island had been tentatively approached with queries about the possibility of setting up of electronic exchanges.

?It makes the BSX a self regulated organisation, like the New York Stock Exchange,? he added. ?But it does not make a huge amount of difference to the way we regulate the BSX. This clarifies the issue.?