A report giving Bermuda’s trust industry a high money-laundering threat level is misleading, according to a top industry professional.

Randall Krebs, director and legal counsel at Harbour Fiduciary, spoke after the National Anti Money Laundering Committee published the Report on 2020 Money Laundering and Terrorist Financing Risk Assessments.

Released in May, the document gave Bermuda’s trust industry a high threat rating in the money-laundering vulnerability, risk and threat categories, going up from medium in 2017.

“The assessment could be misinterpreted,” Mr Krebs told The Royal Gazette. “All it is saying is that it is potentially risky to provide trustee services to rich people. Everyone already knows that.”

Mr Krebs is a member of the Bermuda Association of Licensed Trustees, and was Citywealth magazine’s 2023 Trust Professional of the Year.

The report attributed the high rating to sectoral characteristics common to the industry globally, such as the high value of asset risk transfers, global reach of trusts under operation and related risk profile of customers, such as high-net-worth individuals and personal equity plans.

Mr Krebs thought the change owed more to a deeper analysis of money-laundering threats to Bermuda than any major changes in the actual threat profile.

He said what is not in the assessment is that the burden of measures on his industry increased from “high to very high” between 2017 and 2020.

“Because organisations such as the BMA, OECD, EU, and FATF know that internationally there is a high potential risk, measures have been introduced to reduce the actual risk of money laundering,” he said. “This includes local and international legislation/regulation, recommendations, guidance, reporting and audits.”

He thought the mitigation measures in place now had actually resulted in a decreased risk of money laundering in Bermuda.

“A better job could be done clarifying what the assessment is actually measuring, and that money launderers are not roaming the streets of Bermuda,” Mr Krebs said.

John Gibbons, a trust manager at Harbour Fiduciary, said he thought the ratings change was unfair.

“When I speak to people abroad, their impressions seem based a lot more on popular perceptions rather than reality,” Mr Gibbons said.

He said Bermuda follows a lot of regulation.

“There is nowhere harder to hide money now, at least in the English-speaking offshore jurisdictions. But people fail to recognise that. That bothers me.”

Mr Krebs said movies and television have fed us images of drug dealers walking into banks with duffel bags full of money.

“That does not happen any more, certainly not in Bermuda,” he said. “That is because the AML legislation/regulation has been introduced to reduce the risk that Bermuda will be used by money launderers.”

He said none of the stages of money laundering, at any scale, can happen in Bermuda, unless there is a failure in another jurisdiction. He said because no trustee would accept cash in Bermuda, the first steps of money laundering cannot occur here.