Attorney General and Minister of Justice, Senator Kim Wilson, has welcomed the International Narcotic Control Strategy Report (INCSR) for 2008, which places Bermuda in the lowest risk category for money laundering and terrorist financing.

Sen. Wilson said that Bermuda has long been recognised as a quality financial services centre, as reflected in the continual influx of new business from Fortune 500 and other comparable 'blue chip' companies.

"This report confirms our sterling reputation as an international business and financial services jurisdiction that has been enhanced by Bermuda's sound business practices and our long history of effective scrutiny of clients which has resulted in a strong 'Know Your Customer' regime, and our superior regulatory structure," she said.

In a recent assessment by the US State Department on vulnerabilities and threats to the US national security and the stability of the global financial system, posed by money laundering and terrorist financing, Bermuda is put in the lowest category of risk.

The INSCR 2008, Volume 2, which has been recently released by the State Department, covers money laundering and financial crimes, and in it the State Department assigned priorities to jurisdictions using a classification system consisting of three different categories titled 'Jurisdictions of Primary Concern', 'Jurisdictions of Concern', and 'Other Jurisdictions Monitored'.

The review by the State Department includes an assessment of:

l the significance of financial transactions in a country's financial institutions that involve proceeds of serious crime;

• steps taken or not taken to address financial crime and money laundering;

• each jurisdiction's vulnerability to money laundering; the conformance of its law and policies to international standards;

• the effectiveness with which the government has acted; and

• the government's will to take needed actions.

The assessment in the INSCR report is broader than an International Monetary Fund review, which is based on the Financial Action Task Force (FATF) recommendations. A FATF review relates to stated criteria regarding a country's legal and regulatory framework, international co-operation and resource allocation. The INSCR assessment is more comprehensive as it evaluates a range of factors including conformance to international standards.

'Jurisdictions of Primary Concern' are those jurisdictions that are identified as per the INCSR reporting requirements as "major money laundering countries".

A major money laundering country is defined in US law as one "whose financial institutions engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking".

Because of the complex nature of money laundering and the difficulty in differentiating between proceeds from narcotics trafficking from the proceeds of other serious crime, the category 'Jurisdictions of Primary Concern' includes countries and other jurisdictions whose financial institutions engage in transactions involving significant amounts of proceeds from all serious crime.

Among some of the INCSR 2008 Jurisdictions of Primary Concern are the Bahamas, Cayman Islands, Canada, Hong Kong, the UK and US.

Jurisdictions which are not considered to be major money laundering countries are separated into 'Jurisdictions of Concern' and 'Other Jurisdictions Monitored'.

Having taken all of the factors noted above into consideration, it was determined by the US State Department, that Bermuda should be placed in the 'Other Jurisdictions Monitored' category, which indicates that the country is considered a low risk for money laundering.

Sen. Wilson reiterated that Government is committed to preserving the island's reputation and continuing the fight against money laundering and terrorist financing, while legislative changes are a top priority, with a number of relevant bills currently before the House, including The Financial Intelligence Agency Amendment Act 2008; the Proceeds of Crime Amendment Act 2008; and the Anti-Terrorism Amendment Act 2008.