Some of Bermuda's financial institutions have failed to update their procedures to comply with new laws to fight money laundering, according to the Island's top regulator.

Bermuda Monetary Authority chief executive officer Matthew Elderfield told a gathering of compliance officers that on-site visits by his staff had uncovered "patterns of unacceptable practice" at some companies.

Mr. Elderfield told delegates at the Compliance II Summit at the Fairmont Southampton hotel about plans to give the BMA more teeth in terms of enforcement action it can take.

And he also outlined plans for enhanced codes of conduct for companies selling financial services to the public, as well as efforts to improve the financial literacy of consumers.

"It is most likely that our first enforcement actions will relate to AML (anti-money laundering) issues," Mr. Elderfield said.

"Let me say that based on our AML-themed visits and regular on-sites we are already seeing some patterns of unacceptable practice where improvements are required: for example KYC (Know Your Customer) documentation has been good in many cases, but for some firms our file reviews have shown significant gaps.

"Across the board we have seen some tardiness in updating procedures to reflect the new legislative framework. We have also routinely seen weakness in training practices on AML. And we have seen uneven practices in monitoring client activity to see whether SARs (Suspicious Activity Reports) are required."

Mr. Elderfield asked for the support of the compliance officers present to ensure improvements were made.

"We are putting you on notice that persistent weaknesses in these areas into next year will make firms liable for enforcement action," he added.

After the winding-up actions were taken this year against Emerald Financial and the Bermuda branch of British American Insurance Company, Mr. Elderfield said the BMA planned to sharpen its focus on companies selling financial services to the public.

"We will not be getting involved in the transactional or commercial disputes between retail customers and financial firms — it's not our responsibility to handle completes," Mr. Elderfield said.

"However we will be encouraging better standards of business conduct through improved codes of conduct in a number of areas. Stay tuned for more details.

"We will also be monitoring compliance with existing codes more closely as part of our supervisory activity. And we will be coming forward with measures next year to improve financial literacy within the local community through consumer education initiatives."