America says the Isle of Man is being used by drug dealers and conmen to launder money.

In its 2009 International Narcotics Control Strategy Report, the State Department details all countries involved in the drug trade and includes the Isle of Man as a country used by money launderers.

The annual report says: "Its large and sophisticated financial center is potentially vulnerable to money laundering at the layering and integration stages. Most of the illicit funds in the IOM are from fraud schemes and narcotics trafficking in other jurisdictions, including the UK. Identity theft and Internet abuse are growing segments of financial crime activity. The US dollar is the most common currency used for criminal activity in the IOM."

The report goes on to mention the Island's anti-money laundering legislation and the efforts made to spot dodgy dealings.

It describes its regulatory regime as transparent and user-friendly, further promoting it as a leading offshore market.