evasion in the Channel Islands and the Isle of Man is a harbinger of what other offshore territories could face under a tough new approach.

This week Britain's Home Secretary Jack Straw released a report warning that the battle against financial crime was "not being convincingly won'' in the Channel Islands and the Isle of Man. The report was the result of a ten-man inquiry into the territories, which fall under the jurisdiction of the Home Secretary, by retired Treasury official Andrew Edwards.

Meanwhile, Bermuda and other dependencies fall under the administration of the Foreign Office.

In his report Mr. Edwards concluded that institutions held assets worth up to 350 billion, placing the Channel Islands and the Isle of Man in the "top division of offshore financial centres''.

He called for tough new measures to combat financial crime on the islands, including powers to seize the assets of wealthy individuals who cannot account for their money.

He warned the police forces on the islands were inadequate to the task and needed to consider setting up financial crime units. The government ordered the inquiry amid concerns that the islands' secretive banking system and company laws made them a base for money laundering operations by international drug syndicates.

In contrast to the islands under scrutiny in the report, Bermuda has already implemented money laundering legislation and has a fraud squad in place.

BUSINESS BUC