The bad rap and innuendos fired at offshore financial centres as being havens for "dirty money" is increasingly wide of the mark, and it is the big onshore jurisdictions such as the US, UK and Australia that need to look more closely at what is going on in their own backyards.

Bermudian law student Alexa Rosdol has highlighted the unjust reputation that Bermuda and other offshore financial centres (OFCs) are burdened with in an article to appear in this month's Journal of Money Laundering Control.

In it she indentifies indisputable evidence and facts that reveal OFCs as ahead of the field introducing and enforcing regulations to combat criminal money laundering and making their islands a less attractive place for questionable "shell" companies to be set-up.

Ms Rosdol focuses on Bermuda and Cayman and the UK Crown dependencies of Guernsey, Jersey and the Isle of Man, contrasting them with the UK, but also making considerable reference to the "onshore" financial centres of Australia and the US.

Currently studying on an Appleby scholarship at the London School of Economics for a Masters of Law, Ms Rosdol's academic paper is entitles Are OFCs leading the fight against money laundering?

Through her research, she has come to the conclusion that many traditional criticisms aimed at OFCs are now becoming outdated and the commonly-held perception that certain OFCs are lagging behind offshore jurisdictions in their anti-money laundering efforts needs to be seriously revised.

The five offshore jurisdictions were chosen because of their close connection with the UK.

"Money laundering is a complex problem which leaves no jurisdiction untouched. The International Monetary Fund (IMF) estimates the amount of money laundered each year ranges between two and five percent of the world's gross domestic product, or between $600 billion and $1.5 trillion," writes Ms Rosdol.

Which countries are being used for the money laundering? Some US lawmakers estimate half of all that money flows through the US. The UK home office believes around $36m - two percent of the UK's gross domestic product - is dirty money being laundered.

Ms Rosdol compares anti-money laundering measures in the offshore and onshore countries. Bermuda and the other four offshore centres have a higher number of Financial Action Task Force 40 Recommendations fully observed than the UK, US or Australia. This fact was picked up by the Sydney Morning Herald, which wrote: "The easiest places to launder dirty money are the US, UK and Australia...the three great centres of global capital are home to financial disclosure rules more commonly associated with palm-fringed islands."

The US International Narcotics Control Strategy reports that OFCs "have as good anti-money laundering regimes" as the selected OFCs.

The IMF has also highlighted the close relationship between unlawful activities and the ease with which the beneficial ownership of international business companies, or non-resident companies and trusts can be secured.

"In Bermuda and Guernsey there is upfront disclosure to the authorities of the beneficial ownership of companies, while many onshore jurisdictions chiefly rely on an investigative system," reports Ms Rosdol.

She points out that Transparency International argues double standards are being practiced as British offshore jurisdictions have been forced to introduce regulations while the UK has not followed suit, and further that UK supervision of trust and company service providers will only happen when the 3rd EU Money Laundering Directive is implemented on December 15 this year.

In certain US states it is worse, with even Senator Carl Levin lamenting: "People have to supply more information to get a driver's licence than to form a company. The US Government Accountability Office found that some states regularly incorporate new non-publicly traded companies without any knowledge of the identity of the owners.

"The FBI has recently stated that US shell companies are being used to launder up to $36bn from the former USSR," writes Ms Rosdol.

Comparing key states Nevada, Delaware, and Wyoming to Bermuda, Isle of Man and Jersey shows the OFCs "have higher levels of scrutiny and require more ownership information than the US states."

Concluding Ms Rosdol said there is strong evidence "that certain OFCs are ahead of some onshore jurisdictions in the implementation of anti-money laundering and combating the financing of terrorism measures" and that "although many OFCs do attract dirty money they are outnumbered by the number of onshore jurisdictions attracting dirty money."

Ms Rosdol said: "Crown Dependencies and selected Overseas Territories show they are not only keeping up with the US, UK and Australia, but in many cases are 'outdoing' the anti-money laundering and combating the financing of terrorism regimes of these onshore jurisdictions.

"OFCs now have more stringent anti-money laundering measures in place than their onshore counterparts. The unfounded negative perception that all OFCs are magnets for dirty money where the authorities turn a blind eye must be addressed."