THE Bermuda Monetary Authority has hit back against allegations that it is not adequately defending Bermuda against financial crime such as the alleged Madoff fraud.

Bermuda International Business Association director Michael Hardy last week called on the BMA to crack down on companies using the island for criminal activity like money laundering, telling the Mid-Ocean News that the Bermuda Police Service has no resources for such investigations.

This week, BMA assistant director of communications Pat Phillip Bassett said that while investigating and obtaining evidence for criminal prosecutions remains primarily a matter for the police, the regulatory body will investigate matters and take "supervisory or enforcement action" where it has jurisdiction. However, the BMA is unable to make its investigations public, according to Ms Phillip Bassett.

"The BMA works co-operatively with the Bermuda Police Service assisting with the detection and prevention of financial crime," she said.

"However, statutory confidentiality provisions mean that the Authority does not publicly discuss investigations of regulated firms."

In last week's Mid-Ocean News, a reinsurance CEO speaking on the condition of anonymity alleged that the BMA should be investigating companies doing business in Bermuda for oversight purposes, adding that "if Bermuda has not been exposed to a Madoff-type disaster, it will come".

Ms Phillip Bassett agreed that the recent multi-billion-dollar fraud allegedly perpetrated by US investor Bernard Madoff, which left some Bermudian companies exposed, "highlights the importance of effective regulation".

She added, however, that the losses of Bermuda-based companies are in no way unique, nor do they stem from a lack of regulation by the BMA.

"The Madoff fund that committed the fraud was not based in Bermuda," she said.

"As a result, it was not required to have a fund administrator or independent custodian, which appears to have facilitated the fraud. It should be noted that losses have been suffered by investors in nearly every financial centre and include some of the most prominent and heavily regulated financial institutions in the world."

She added that the BMA has recently received additional powers thanks to the passing of December's Proceeds of Crime Regulations Act. The regulatory body has also beefed up its team to combat corporate crime, including money laundering and fraud.

"The Authority recently received additional powers with respect to anti-money laundering, including the ability to impose fines of up to $500,000," she said. "We have formed a dedicated team to combat money laundering and we have recently hired an experienced enforcement lawyer to lead our investigations work."

Ms Phillip Bassett countered claims by the reinsurance CEO in last week's Mid-Ocean News that the BMA is "worse than useless", reassuring readers that the Authority is "not complacent" about the threats of corporate crime to Bermuda.

"The BMA's regulatory approach has received strong support from both the International Monetary Fund and our stakeholders in Bermuda, in a recent report and a recent survey," she said. "However, we are not complacent and aim to enhance our approach over time in a risk-based manner so that we use our resources effectively."