Bermuda has emerged from a tough examination of its financial controls with its reputation intact.

The Bermuda Monetary Authority was hailed as "one of the most developed offshore regulators''.

The overwhelmingly positive KPMG report also had several suggestions for beefing up even more the Island's systems -- although Finance Minister Eugene Cox warned that not all of them would necessarily be adopted.

The top billing for Bermuda was handed down in a report from the accounting firm KPMG who were commissioned by the British Foreign and Commonwealth Office to conduct a probe into the financial regulatory systems of its Caribbean Overseas Territories and Bermuda.

In the long-awaited report released today, KPMG said: "Overall the BMA ranks as one of the most developed offshore regulators, meeting or exceeding many international standards and making considerable progress to meet those it is not yet in full compliance with.

"Similarly the controls in place in Bermuda, particularly in relation to the formation of companies are, in our view, a major deterrent to the criminal abuse of Bermudian companies.'' Despite passing this latest round of financial business investigation with flying colours, the report did suggest several improvements Bermuda should make to its existing rules and regulations. And in a release from the Minister of Finance Eugene Cox, he conceded that "some enhancements are always possible''.

The main suggestions and observations in the report were: the Bermuda Stock Exchange should be regulated by the BMA and be subject to on-site inspections; insurance companies should be regulated by an independent body and not the Registrar of Companies who is a part of the Ministry of Finance; in the insurance industry, third parties such as auditors, are relied on too heavily by the regulator and should be subject to specific guidance and verification as well as on-site inspections; an increase in the regulatory ability to assist foreign regulators in investigations of Bermudians or Bermudian entities should be implemented; exemptions under the new Investment Business Act are too wide and should be narrowed; a method to disqualify a person from acting as a director of a Bermudian company be introduced; BMA hailed the names of directors should form part of the publicly available information held at the companies registry; the details of company directors be submitted to the BMA and be subject to the same vetting process as beneficial owners; company service providers fall under an enforceable code of practice and be subject to anti-money laundering regulations; the scope of those covered by anti-money laundering regulations needs to be extended; and the legislation ensures that full international co-operation with other enforcement bodies can be provided.

Mr. Cox welcomed the recommendations and said they contained "no fundamental surprises'' as they reiterated areas already identified by the BMA and the Registrar of Companies "in need of strengthening''.

But he also warned that the suggestions would not be adopted blanketly.

"As one would expect with any review, there will be some recommendations, which will require more careful consideration and perhaps will need to be reserved on,'' he said.

"Caution will be required to ensure that recommendations made within the insurance sector, which the report recognises `is not a significant retail market, but primarily captive and reinsurance business', will actually complement the risk-based focus that already exists in our system of regulation,'' he said.

Citing the "conservative and mature nature of the Bermuda market'' Mr. Cox said that further discussions within Bermuda and the appropriate UK representatives would take place where the Government was "unconvinced that quality and value will be added by recommendations in the report''.

Today's report follows a similar review released this summer by the Organisation for Economic Co-operation and Development (OECD) and a money laundering review conducted by the Financial Action Task Force (FATF).

Bermuda fared well in both instances, managing to be kept off a list of jurisdictions deemed to engage in harmful tax practices (the OECD report) or as being non-co-operative in terms of money laundering (the FATF report).

BUSINESS BUC