Sanctions could include withdrawal of use of the dollar, cancellation of international treaties or imposition of Witholding tax on companies doing business in these jurisdictions.

The Bermuda Government, together with a number of other offshore governments, sent an advance letter of commitment to adherence to OECD principles in May last year. The letter said: "In fulfilment of this commitment the government of Bermuda undertakes to impliment such measures as are necessary to eliminate any harmful aspects of Bermuda's regimes that relate to financial and other services.'' The commitment related to three specific areas: effective exchange of information; transparency in business; substantial activity in respect of international businesses established in Bermuda.

Legislation is already being drafted or actively considered to ensure these commitments are met and Government has said that adopted recommendations relating to the finance sector will be in place by December 2003, and for other sectors by December 2005.