You are with us...or against us. This is the sentiment of David Aufhouser, general counsel of the US Department of the Treasury speaking at a symposium on money laundering at the Bermuda Underwater Institute on Monday.

Nominated by US President George W. Bush, Mr. Aufhouser serves as the chief legal advisor and a senior policy advisor to the Secretary and the Treasury and is chairman of the interagency task force on terrorist financing.

During the seminar organised by local law firm Mello Jones & Martin, Mr. Aufhauser explained how the Patriot Act came about and why the world would embrace the Act or face the consequences of US sanctions.

"We are at war. Revenues are sorely needed," to protect the US and the rest of the world from terrorism said Mr. Aufhauser.

While not commenting in depth on corporate inversions that have drawn the ire of several US officials, Mr. Aufhauser said that the complex 9,500 page tax code was to blame and it needed to be simplified.

He said "The incentives to relocate here (Bermuda) arise out of our own tax code." He also said that Bermuda's incidence of tax was lower than in the US, but also said he was all in favour of "healthy tax competition."

But he added that the aim of the US regulators now was to remove the unintended incentives so that people will make choices which are not based on the tax code. Mr. Aufhouser said it was a "privilege" for US citizens to pay taxes which amount to $2 trillion a year. He also said it was a privilege for non-US companies to do business with the US but that non-US countries must cooperate with the wishes of the US or face the repercussions.

"The war requires international cooperation or it borders on political theatre," said Aufhauser. "Comply with the Patriot Act" said Mr. Aufhauser. He said the alternative was for the US authorities to monitor every single transaction that occurs and run the data through extremely complex and expensive computer systems to look for anomalies that would send up warning flags alerting the authorities to suspect transactions. He said had this system been in place before September 11, a warning flag would have been raised following two wire transfers on the same day from Mohammad Atta from Maryland to Dubai - which he labelled the epicentre of terrorist financing.

Mr. Aufhauser said the best way to stop terrorism was to stop the flow of money to the terrorists which is what the Patriot Act is intended to do. And he said the way this would be achieved would be to "deputise" people in the US and around the world to be honest, and vigilant in stemming the flow of illegal money to terrorists

Mr. Aufhauser said to date, 161 countries had pledged to block terrorist assets and gave a public figure of $116 million in illegal funds that had been stopped, but said the unofficial figure was much higher.

However, Mr. Aufhauser gave the example of the drug war which has raged for the last 20 years with no discernable results. Countless money and resources had been spent on the drug war but the drug trade continues to thrive. America's new war on terrorism is likely to soak up more resources and money, but only time will tell if it was money well spent.