Bermuda's know your customer procedures can be traced back over 60 years to the Defence (Finance) Regulations of 1940. These Regulations were introduced to ensure that Bermuda's assets were kept out of the hands of wartime enemies.

After 1945, the focus changed. There were still "enemies", but they were now recognised as those who might want to use Bermuda as a base for unlawful activities or those whose association with Bermuda was seen as involving unacceptable reputational risks for us.

In 1973, the Defence (Finance) Regulations were replaced by the Exchange Control Regulations.The latter are still in force, administered by the Bermuda Monetary Authority, and they form an important part of our defences. Any non-resident wishing to be the beneficiary of the issue or transfer of a Bermuda security must first obtain consent under the Regulations.

Before that is done, appropriate checks on the applicant are undertaken. Similarly, no ownership in a Bermuda entity can be transferred to a non-resident without us doing the same due diligence on the prospective acquirer of the shares.

As early as October 1991, the Bermuda Monetary Authority introduced an Anti-Money Laundering Code of Conduct.

At that time, this Code did not have the force of law, but it was formally accepted and implemented by Bermuda's banks.

Later, in September 1995, the authority issued an updated document plus guidance notes that extended the scope of the Anti-Money Laundering Code of Conduct to Bermuda's other financial institutions. These Codes represented an important interim step. They prepared the way, and were finally superseded by new primary legislation passed in 1997.

The Proceeds of Crime Act 1997, which criminalises money laundering, came into force in January 1998.

All indictable offences are now predicate offences for the purposes of the legislation. Additionally, an extensive list of financial institutions is regulated under the Proceeds of Crime (Money Laundering) Regulations 1998. Their effect is to impose the standard know your customer and related obligations on those institutions, most of them supervised by the Bermuda Monetary Authority.

(Source Cheryl-Ann Lister, Chairman and CEO of the Bermuda Monetary Authority)