Opposition MP Grant Gibbons has accused Government of dropping the ball on financial regulation which then led to stinging criticism from British MPs concerned Bermuda was lagging behind other UK territories.

And he said the dithering would make it easier for Bermuda's competitors to siphon off business, although the Bermuda Monetary Authority said the MPs were basing their comments on outdated information and that there is a high level of compliance with international regulations. This week it emerged a top British MP had branded Bermuda's record in tackling money laundering and tightening compliance in the financial sector as "appalling".

The head of Britain's Committee of Public Accounts (CPA) Edward Leigh also said that with anti-money laundering measures Bermuda was materially non-compliant in 22 percent of cases while compliance in the insurance sector was materially non-observed in 44 percent of cases.

Dr. Gibbons said the International Monetary Fund had visited Bermuda in 2003 to assess legislation, regulation and supervision and had then made recommendations but there was no real movement here to address some of those issues.

"I think that is where Government dropped the ball."

So when the IMF team came back in 2007 it found little progress. "What the Ministry of Finance did was give other people a stick to beat us with," said Dr. Gibbons.

He added that the CPA had been wielding that stick in fiery hearings in which Bermuda was attacked along with Britain's top civil servant in the Foreign and Commonwealth Office who was accused of being "asleep on the job" by not enforcing higher standards.

In response Finance Minister Paula Cox said Government had passed several bills to help crack down on money laundering and further work was being done as the IMF continued to raise the bar. However Dr. Gibbons said: "It's got a little weak to say, 'we are still the premier jurisdiction, we are still gold standard' when clearly that is not the way we are viewed in other places and clearly reputation is a very important issue.

"Having opened ourselves up to a situation where clearly we are seen as being deficient now we have moved post haste. When you move quickly often there is an over-compensation and there's a competitive disadvantage."

Meanwhile jurisdictions like the Caymans were getting a competitive advantage by having offered the right amount of reform, said Dr. Gibbons. "If we had done better we would be in a better position to defend ourselves and our reputation."

Government had created the Financial Intelligence Agency to assess reports related to suspected money laundering but Dr. Gibbons questioned whether the new body was actually doing any work yet.

And he said the lack of money laundering prosecutions was embarrassing. The British MPs also raised concerns about jurisdictions where Public Accounts Committees (PAC) met in private. In Bermuda this cross-party group of MPs scrutinises the nation's finances behind closed doors, despite all five members agreeing hearings should be open to the public and press in July 2004.

Dr. Gibbons, who chaired the PAC at the time, said he believed the report had been shelved by the Alex Scott Government because it could not get the support of the Progressive Labour Party caucus. He said holding secret meetings led to delays in getting the information before the public via reports tabled in the House — but in countries where PAC meetings were held in public the information was instant and the civil servants who gave evidence came better prepared.

Last night the Bermuda Monetary Authority, echoing a statement from the Association of Bermuda Insurers and Reinsurers, took issue with criticism by the CPA of Bermuda's insurance regulation.

BMA CEO Matthew Elderfield said: "It is evident and unfortunate that the Committee is basing their conclusions regarding insurance regulation in Bermuda on outdated information and an IMF assessment that was conducted five years ago.

"In that interim period, there have been significant enhancements to Bermuda's regimes for insurance regulation. An IMF assessment conducted last summer is due to be released shortly and demonstrates that Bermuda has a high level of compliance with international standards for financial regulation of the insurance sector and in many instances exceeds those standards."

With respect to anti-money laundering (AML), Mr. Elderfield said it was disappointing that Bermuda's long-standing Know Your Customer regime has not been acknowledged.

"It is clear that there has been a major programme of AML work underway over the past year. That work has already resulted in us increasing our resources dedicated to AML supervision at the BMA; revisions to legislation that will increase our powers in relation to AML enforcement; and the creation of the Financial Intelligence Agency to strengthen Bermuda's supporting infrastructure for combating money laundering.

"This programme continues, with new legislation being published for consultation today."

Government last night stated that the amount of money it is reimbursed by the British Government for salaries for the Deputy Governor and his executive officer is approximately $350,000, not £336,000 as stated in the PAC report.