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Dirty money defences face international test

Bermuda will face a massive test of its defences against dirty money linked to money laundering and terrorism next year.

And David Harper, a director at professional services firm KPMG and an expert in the field, warned that the inspection by the Caribbean Financial Action Task Force was crucial to the island's future as a major financial centre.

Mr Harper explained that real estate agents and high value dealers like jewellers and boatyards will come under more scrutiny as part of an international effort to crack down on crime.

He said those involved in the financial sector, like banks, law firms and accountants, were already regulated with checks to ensure they were not used to launder dirty money.

Mr Harper added: “If you add all that up, it's a huge proportion of the business population. That's going to mean a lot of work on compliance programmes.”

He said that other sectors will now come under the same kind of safeguards as banks, which now demand considerable amounts of personal information before accounts are opened.

Mr Harper added: “If people buy real estate, they will request that from them, if they a boat with cash, the boat dealer will ask for it.”

But he stressed: “People shouldn't be concerned — it's just part of the process whereby companies can demonstrate they know who their customer is.”

Mr Harper said: “The 2018 inspection is hugely important for Bermuda and will and will influence its status in the international community to a huge degree.”

And he warned: “A lot of international business would consider leaving the island if we don't get a good report on that.”

He added that one of the requirements for continued EU Solvency II equivalence, which guarantees Bermuda a level playing field when doing business in Europe, depended on anti-money laundering law in line with the EU's.

He said: “It could impact on our ability to continue having Solvency II equivalence.”

Mr Harper was speaking as KPMG prepare to launch a series of round-table discussions for different sectors of the business world to highlight what needed to be done to keep in line with new and tougher rules.

He said: “It's an opportune time to continue to raise awareness of what's happening and the importance of it.”

Mr Harper added that a similar inspection to next year's CFATF probe had been carried out by the International Monetary Fund in 2007 — which resulted in a poor report.

He said: “We've done a lot of work since then and Bermuda's compliance regulation is a lot better as a result.

“As a jurisdiction, compared to similar offshore jurisdictions, we are in a relatively good spot, but that's not to say it can be taken lightly.

“It's important to get a good report. That's why so much effort is going into it and all these other companies are being brought into it.”

Mr Harper added: “A good report could enhance the jurisdiction and attract more business. It's all about trying to achieve a positive outcome.”

David Harper of KPMG in Bermuda

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Published June 01, 2016 at 9:00 am (Updated May 31, 2016 at 9:40 pm)

Dirty money defences face international test

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