Iceland’s Law Enforcement Authorities Commit to Tracing and Seizing Crime Proceeds

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Iceland’s law enforcement authorities have made a commitment to tracing and seizing the proceeds of crime, both domestically and internationally. While they have had success in freezing or seizing assets in various cases, the lack of complete statistics on recovered assets makes it difficult to assess their effectiveness.

Coordination and Awareness

Despite this commitment, there appears to be a lack of coordination among authorities regarding the increased risk of cross-border transportation or movement of currency. This is particularly concerning given Iceland’s geographical location and cultural factors.

Terrorist Financing Concerns

Iceland has not had any criminal investigations or prosecutions related to terrorist financing (TF). While it has demonstrated effective cooperation with other countries’ security services, there seems to be a lack of consideration for TF vulnerabilities within the country. The Icelandic police’s limited financial investigative expertise may hinder its ability to prioritize combating TF.

Financial Sanctions

Iceland amended its legal framework in 2016 to implement targeted financial sanctions (TFS) following UN Security Council Resolution 1267. However, there is a lack of clarity among competent authorities on the legal framework for implementing TFS in Iceland. Additionally, the private sector lacks clarity on when the freezing obligation takes effect.

Anti-Money Laundering and Counter-Terrorist Financing Measures

Supervisory authorities do not monitor compliance with TFS, except for issuing alerts following updates to the government’s targeted financial sanctions list. There is a low level of awareness among designated non-financial businesses and professions (DNFBPs) and certain financial institutions (FIs) about their responsibilities related to TFS.

Preventive Measures

Large commercial banks in Iceland have some understanding of money laundering risks, but this understanding is not based on structured risk assessments. Most DNFBPs and FIs lack an understanding of ML/TF risks and do not assess the risks they are exposed to.

Supervision

Iceland has a comprehensive licensing and registration framework in place to prevent criminals from holding or being the beneficial owner of significant interests in financial institutions (FIs) and designated non-financial businesses and professions (DNFBPs). However, inspections and supervisory measures are not conducted using a comprehensive risk-based approach.

Conclusion

The review highlights areas where Iceland can improve its efforts to combat money laundering, terrorist financing, and other financial crimes. The country’s law enforcement authorities will need to enhance their coordination, awareness, and expertise to effectively trace and seize the proceeds of crime and prevent future criminal activity.