Bermuda's financial sector could be strangled by international red tape forced on it by Britain, a top lawyer has told US attorneys.

And barrister John Collis said that the UK's White Paper on its colonies may signal a drive towards probing which goes beyond ownership of international companies and directors.

Mr. Collis added: "There is a genuine concern that the Territories might be subject to the impossible task of having to become `experts' in the tax laws around the world or otherwise be exposed to criminal liability simply to accommodate foreign `fishing trips' in the Territories.'' He said that the UK Overseas Territories of Bermuda, the Caymans and the British Virgin Isles had all adopted similar anti-money laundering laws at Britain's request.

He added: "There is no general public disagreement in the Territories with the notion of preventing money-laundering, particularly with respect to drugs, terrorism, fraud-related matters and the like.'' But he admitted: "One issue on which there is some contention, however, is `fiscal offences' and the rights of a foreign authority to seek information available in the Territories.'' Mr. Collis said Bermuda -- unlike the Caymans and BVI -- required its international business to disclose the beneficial ownership of companies, while share registers and directors' registers are "generally a matter of public record.'' But he warned: "It is not clear whether the notion of availability in the White Paper goes beyond availability or access to the public records. "It may be that exchange of information, perhaps in matters relating to fraud or tax evasion, will also be included.'' Mr. Collis, however, said that there was "no reason to believe'' that Foreign Secretary Robin Cook would insist on UK-style legislation and institutions being adopted in its colonies to cover financial services, banking and insurance.

He added: "I do not think that the Secretary of State would visit the chaos of the current UK financial services regulation on its worst enemies in Belgrade, let alone the beloved colonies.'' Mr. Collis was speaking on the UK's White Paper rewrite of relations with its colonies at a meeting of the American Bar Association, held on the Island last week.

He told the US attorneys that a look at the UK's Edwards Report recommendations for Crown Dependencies like the Channel Islands and the Isle of Man, which have economies similar to Bermuda's, could provide clues to Britain's thinking.

Mr. Collis said that one theme of the Edwards Report and the White Paper was the independence of financial regulators.

He added: "I suspect, therefore, that the independence of Territories' regulators will be an issue.

White Paper threatens financial sector: lawyer "Many of the statutes in Bermuda and Cayman already devolve regulatory powers on to their regulators and BVI is moving that way.

"The remaining powers now held by Ministers would have to be handed over to the regulators.'' And he added: "By itself, this may be no bad thing provided that such regulators are given clear statutory directions over these new powers and can be held accountable for their decisions.'' But he said that Bermuda's regulations -- which had already satisfied two UK reviews of offshore financial regulation -- could well "set the standard'' under the UK's review of its Territories.

Mr. Collis added that the Caymans and BVI -- with "one or two notable exceptions -- were similar to Bermuda in regulation terms.'' And he said: "Accordingly, there is every reason to suspect that these three Territories should experience little by way of changes in order to accommodate the UK demand for future regulation.'' TAXES TAX