The UK Foreign Affairs Committee has recommended that Bermuda keep working to improve its anti-money laundering regime in a report on the British Overseas Territories, published yesterday.

Financial regulator the Bermuda Monetary Authority (BMA) came in for criticism for its alleged lack of investigation of suspicious activity involving local companies in a statement given to UK MPs who make up the committee.

Committee chairman Mike Grapes, a Labour MP, said: "We recommend that the FCO (Foreign and Commonwealth Office) should encourage Bermuda, the British Virgin Islands, the Cayman Islands and Gibraltar to continue making progress in improving financial regulation, in particular in arrangements for investigating money laundering."

The report quotes financial professional Mike Hardy as telling the committee that "insufficient emphasis had been placed by regulators on the investigation of licensed companies, managers and executives with regard to suspicious activities".

Mr. Hardy claimed the BMA had not made one significant "official" criminal complaint, or suspicious activity report, to the Police Fraud Unit in 25 years.

"It appears that the BMA, whilst dealing with unsavoury situations by co-operating with overseas regulators and providing them with significant help where required to put criminals in jail in foreign jurisdictions, does not proactively investigate suspicious circumstances themselves," the report quotes Mr. Hardy as saying.

Mr. Hardy called for the BMA, as well as a separate investigative branch to work closely with the Police, to step up to take on investigations.

Committee representatives visited the Island and met with the BMA's CEO, who spelled out the plans to strengthen the Island's anti-money laundering standards.

The report also included a comment from the UK's National Audit Office, which pointed out that the Island's main business was corporate reinsurance, which was "lower-risk and therefore less likely to generate suspicious activity reports".

There was some sympathy in the report for a view expressed by the BVI (British Virgin Islands) Financial Services Commission that onshore competitors were keen to accuse offshore centres of lax standards and frequently gave no recognition of their regulatory advances.

The FCO told the Committee: "We need to recognise there is significant international pressure to limit the role of the Overseas Territories in providing international financial services.

"The Overseas Territories are often expected to apply higher standards of regulation than some OECD (Organisation for Economic Co-operation and Development) countries."