The United Nation's plans to use a carrot rather than the stick in getting offshore havens to toe the line in the war against what the Organisation for Economic Cooperation and Development (OECD), calls "harmful tax competiton''.

The UN is proposing to establish a "white list'' of offshore centres that are international approved and have what it says are acceptable standards of control over their use by the financial industry.

The UN's "Offshore Initiative'' is an alternative strategy to that of the OECD, which plans on publishing a blacklist of offshore centres which are used to illegally escape tax. Economic measurers will then be taken those on the black list to get them up to the mark.

The Isle of Man, The Cayman Islands, Gibraltar and Malta have all recently brought in anti-money laundering measures and have started talks with the UN's global programme about becoming an authorised centre, according to UK-based Offshore Red newsletter.

Bermuda brought in anti-money laundering measures in 1995. This month lawmakers passed amendments effectively making tax evasion part of the legislation. Caymans introduced tax evasion offences as part of its money laundering legislation last year.

In its document the UN outlines a programme designed so the "bad publicity arising from the wilful blindness of some financial havens toward criminal money should not obscure the efforts made by other advanced offshore financial providers to establish anti-money laundering firewalls,'' according to Offshore Red.

The UN Offshore Initiative seeks to target the money laundering issue as separate from the role of offshore centres as low tax zones. In coming months the UN programme aims to initiate research by economic specialists to probe the flow of illicit funds in offshore financial markets.

The UN will also hold an international conference involving offshore centres to set up standards they must follow in preventing money laundering.

The UN will also publish an annual report of the Global Programme Against Money Laundering which will offer investors information about which offshore centres are up to international standards.

The Offshore Initiative is expected to be endorsed at an international conference next year.

BUSINESS BUC