Icelandic Authorities Crack Down on Financial Crimes

Reykjavik, Iceland - In recent years, Icelandic authorities have stepped up their efforts to combat financial crimes, resulting in a significant increase in the number of cases handled by the Financial Supervisory Authority (FME).

Increased Cases and Enforcement Powers

According to figures released by the FME, the agency dealt with 860 new cases in 2003, but this number surged to 1,179 in 2007 - an increase of over 30 percent. The cases vary in subject matter, scope, and required processing time, with a focus on insider trading and other financial irregularities.

In its early years, the FME sent cases regularly to the Economic Crime Division of the National Commissioner of Police, but only a few made it to court due to severe caseload difficulties. However, following legal amendments in 2005, the FME gained administrative powers to levy fines for violations in the securities market, and new legislation in 2007 handed the agency additional powers to impose penalties.

Tax Investigations and Compliance

The Directorate of Tax Investigations, established in 1993, investigates alleged tax crimes and prepares major cases for criminal proceedings. The directorate has a close cooperation with the Economic Crime Division and handles approximately 100 cases per year involving suspected tax frauds.

• Tax violations have evolved over time, with a shift from hidden economies to offshore accounts and complex webs of foreign holding companies.
• The rapid international growth of Icelandic corporations has raised suspicions of major tax evasion, particularly in tax havens such as the British Virgin Islands.
• A recent report by Thorláksson (2008) suggests that a significant portion of profits from these companies is being diverted to foreign owners, leading to concerns about tax evasion and avoidance.

Economic Crime Division

The Economic Crime Division of the National Commissioner of Police was founded in 1997 and receives reports from regulatory agencies for further investigation. The division has a high conviction rate compared to neighboring countries, but its resources have been cut recently, with the number of employees decreasing from 17 in 2005 to 13 in 2009.

Conclusion

In conclusion, Icelandic authorities are taking steps to combat financial crimes, with a focus on insider trading and tax evasion. While progress is being made, there remains concerns about the effectiveness of these efforts and the need for increased resources to tackle complex cases.