Criminals around the world must be stopped from laundering their dirty cash through the Commonwealth's financial institutions, British Chancellor of the Exchequer Kenneth Clarke said yesterday.

"Money launderers are criminals. They must be stopped in their tracks, caught and punished,'' he said.

Mr. Clarke, speaking to Commonwealth finance ministers at the Southampton Princess yesterday, said that money laundering poses a serious threat to every Commonwealth member.

"It is a concern that can only be addressed on a fully international basis,'' he said.

"International criminals seeking a safe harbour for their criminal proceeds are no respecters of international borders, they will always locate the weakest links in the anti-money laundering chain,'' Mr. Clarke said.

"So countries which have not yet put the necessary protective measures in place will find themselves attracting the wrong sort of business not only from fraudsters and crooks but also from criminals that properly regulated centres have turned away.'' In Bermuda, updated money laundering legislation will soon be before parliament, Finance Minister Grant Gibbons said yesterday.

The Island currently has a money laundering code of conduct which was put in place in 1991 as well as anti-money laundering statute which has been in place since 1988 which applies to drug trafficking.

"In the coming parliamentary session, we will introduce legislation that will broaden the crime of money laundering and allow Government to seize the proceeds of criminal activity,'' Dr. Gibbons said.

Being associated with money laundering, or other criminal misuses of the financial system, has a negative impact on any offshore centre, he said.

"And as the Commonwealth Secretariat has noted, the confidentiality and tax status of offshore centres often makes them appear to be attractive domiciles for would-be money launderers. "Our banks and trust companies have a world-wide reputation in private banking, trust and custodianship markets,'' he said.

"Any business that seeks to register here is subject to rigorous checks on its probity and associations before passing the Finance Minister's desk for approval.'' On updated money laundering legislation, Bank of Butterfield senior vice president and group legal advisor Peter Rodger said: "Certainly the Bank of Butterfield endorses that development, with two very important provisos, that civil rights are reasonably preserved as are the rights of the innocent lender.

"I think it is also important to realise that this process will inevitably entail more procedures necessary for customers before they open accounts, not just bank accounts.

"Just as the Chancellor said, money launderers look for the jurisdiction which is the weakest link, they also look for the weakest link in each jurisdiction in terms of the type of business.'' Mr. Rodger, the bank's top lawyer, has spoken at several international conferences about money laundering and will next address the issue at the Offshore Funds Conference in December in Cayman Islands.

Part of the Caribbean Financial Action Task Force (CFATF), Bermuda has an excellent record on thwarting money laundering, he added.

The UK has taken action against money laundering according to the international Financial Action Task Force (FATF), after an evaluation of the UK's legal and regulatory system for combating money laundering.

The FATF, a leading international body of anti-money laundering experts set up by the G-7 in 1989 to combat money laundering, has suggested that the UK's regime could serve as a model for other countries to follow.

"This review by the world's leading anti-money laundering experts shows that the UK has one of the toughest regimes in the world,'' Mr. Clarke said.

He also said that many developing countries have asked how an effective money laundering system can be reconciled with policies to liberalise financial markets. Mr. Clarke said that he saw no conflict whatsoever and that comprehensive anti-money laundering measures encourage, not deter, legitimate business.

The Commonwealth can reduce hiding places for dirty money by; Supporting the Commonwealth Secretariat's proposed "anti-money launderers tool kit'' which provides guidance on how to implement effective legislation and system.

Endorsing the Commonwealth Secretariat's report on countries' progress in this area.

Match the Commonwealth's anti-money laundering systems and procedures to the FATF's updated 40 recommendations.

Encourage the IMF, the World Bank and other international financial institutions to take more fully into account progress in introducing anti-money laundering controls in their consideration of member countries' economics.

Mr. Clarke suggested that the establishment of regional anti-money laundering review groups, modelled on the CFATF, enabling Commonwealth countries to monitor progress. He said that he hoped a southern and eastern Africa FATF would be supported at a symposium to be held in Cape Town next month.

Grant Gibbons