of its financial regulations by accounting giant KPMG.

Yesterday the report -- undertaken by the London-based firm for the UK Foreign Office -- was presented to the House of Assembly.

The response addresses more than 80 of KPMG's recommendations -- with Finance Minister Eugene Cox agreeing with many of them but holding back his opinion on others.

Many of the legislative changes will be implemented by later this year, leaving Island financial regulators well placed to address supervisory issues.

The move comes after the report was produced by KPMG last year, giving Bermuda largely positive feedback on its controls -- but also pointing to possible "could do better'' areas.

The Government's response follows a preliminary assessment based on the following criteria: If the recommendation was based on an international standard or not; the market impact; the resource requirement for implementation; if the recommendation added value to Bermuda's regulatory regime.

They agreed with the core recommendations which relate to improved regulation, independence of the regulator, better international co-operation through greater exchange of information between regulators and extension of anti money laundering provisions to cover proceeds of all serious crime.

Response to financial `health' report published But Government has reserved its position on some issues raised, particularly where no international standard already exists or such recommended practices have not been adopted by 'onshore' jurisdictions.

Some matters were already being addressed and relevant legislation was in the pipeline before KPMG undertook the review. Working to an agreed two year timetable for legislative amendments, Government expects a substantial portion to be enacted by September this year.

This will then place the Island's regulators in a position to address recommendations pertaining to changes in supervision of the finance sector.

In the response the Government has agreed to the Bermuda Monetary Authority having full responsibility for trust company regulation and to insurance regulation being undertaken by an independent body, ie independent of government.

The suggestion that breaches of the 'Know your Customer' code by banks be regarded as regulatory breaches is repudiated by government, as it is for investment business. But a strengthening of enforcement powers for investment business is agreed.

The recommendations for stepping up supervision of the Bermuda Stock Exchange are also agreed and under review.

The Government sees no need for the BMA to vet all company directors or for publicly traded companies to submit audited accounts to the registry. The whole area of supervising and regulating fiduciary work, (companies, partnerships and trusts) is under review by the government and it will not follow all of KPMG's recommendations.

Full details of the Government's response will be published on Monday