Bermuda is described as an "offshore secrecy jurisdiction" in legislation put forward by Sen. Obama himself, in conjunction with Sen. Carl Levine and Sen. Norm Coleman.

The Stop Tax Havens Abuse Act names Bermuda and 33 other jurisdictions, including the Cayman Islands, Hong Kong and Switzerland.

The US Treasury already has the authority under the Patriot Act to impose financial sanctions on jurisdictions found to be "of primary money laundering concern". The bill would broaden those powers to include jurisdictions considered to be "impeding US tax enforcement".

The legislation would also require any financial institution opening an account or creating an entity for a US client in an "offshore secrecy jurisdiction" to report it to the US tax authorities.

The law would also expand what is taxable in offshore trusts when current or future beneficiaries are US citizens and would increase fines for those failing to disclose offshore holdings.

A bill that is causing more concern in Bermuda is one put forward by Representative Richard Neal, of Massachusetts, which is aimed at "ending the advantage of offshore reinsurance entities over American companies".

When he introduced the bill in September this year, Rep. Neal said the amount of reinsurance ceded to offshore affiliates had grown from $4 billion in 1996 to $34 billion in 2007. Of that, he said $19 billion had gone to Bermuda affiliates.

"These insurance profits are shuttled out of the US and then the investment income on those profits is also sheltered from US taxes," Rep. Neal said. "It is easy to see why foreign reinsurers, with such a tax benefit, enjoy a significant market advantage."

Rep. Neal's bill would "disallow deductions for excess reinsurance premiums with respect to US risks paid to affiliated insurance companies that are not subject to US tax".

The legislation would provide the US Treasury the authority to carry out or prevent the avoidance of the provisions of this bill.

In March this year, a Fitch Ratings study of the Bermuda insurance market found that the Island's insurers and reinsurers had an effective tax-rate advantage of 15 percent over their US rivals.

For the past two decades, a group of US insurers, including Berkshire Hathaway, WR Berkley and Chubb, have been pushing for a change in the law similar to what Rep. Neal is proposing.