money laundering case in Canada.

For the Island's world of high finance was used to funnel $CAN1.65 million in dirty money, the Montreal trial of lawyer-turned Quebec judge Robert Flahiff heard.

According to reports, Flahiff used Bermuda banks to launder cash from cocaine deals for a drug-dealer client.

The court heard the cash left Canada and went through Bermuda, Hong Kong, elsewhere in Canada and back to Quebec.

Now Flahiff faces 30 years in jail after a marathon four-month trial which ended in his conviction on three counts of money laundering for ex-client Paul Larue.

The 50-page judgement said: "If Flahiff was not aware of the money's provenance, it was wilful blindness more than anything else.'' Flahiff and another lawyer, Gerald Lavoie -- who has yet to face trial on similar charges -- were arrested after Larue turned stool pigeon following his arrest in a US cocaine sting.

The offences date back to between 1989 and 1991, when Flahiff was in private practice.

But yesterday Bermuda Monetary Authority chief Malcolm Williams said Bermuda was recognised as being a clean jurisdiction.

And he pointed out the offences took place before a voluntary code of conduct was adopted by the Island's financial institutions and in advance of last year's Proceeds of Crime Act.

Mr. Williams said: "The international attack on money laundering did not start until 1988-89 -- Bermuda and the world has moved a long way since then.'' And he added that a voluntary code was put into place in Bermuda shortly after the international Financial Action Task Force announced its 40-point list of recommendations to stem the worldwide flow of dirty money.

Mr. Williams said: "This case might have got under the curtain before it came down altogether.'' He added: "One has to put it in perspective -- it's one case in Bermuda compared to one case an hour in some other jurisdictions.

"No country can claim it's running a perfect system, but Bermuda has shown itself to be operating a system as clean as anywhere else in the world, not just offshore centres, but anywhere in the world.'' Yesterday, the Island's three banks were staying tight-lipped over whether they had been used as part of the drugs scam.

The Bank of Bermuda's official spokeswoman did not respond to questions from The Royal Gazette .

A spokesman for the Bank of Butterfield said: "It's not something we know anything about.'' And a spokesman for the Bermuda Commercial Bank added: "I'm not sure what the legal position of the bank would be -- I would not want to deny or confirm this.'' But he added that it sounded as though a bigger institution would have been involved.