Financial Crime World

Iceland’s Banking Sector Still Rife with Fraud, Warns Former Regulator

A New Book Exposes Rampant Fraud in Iceland’s Financial Sector

Iceland’s financial sector is still plagued by fraudulent activities, according to a new book written by Jared Bibler, a former asset manager at Landsbanki. The book, titled “Iceland’s Secret: The Untold Story of the World’s Biggest Con,” reveals a culture of market manipulation and fraud that persisted long after the country’s devastating financial crash in 2008.

A Culture of Fraud

Bibler worked as an investigator for Iceland’s Financial Supervisory Authority (FME) and uncovered a vast web of securities fraud. He claims that top banks in Iceland, including Glitnir, Landsbanki, and Kaupthing, engaged in massive illegal share-support operations from 2004 onwards.

  • These schemes involved lending millions of euros to shell companies based in the British Virgin Islands
  • The shell companies were then used to secretly buy up bank shares and inflate prices

A Lack of Regulation

Bibler’s team found that banks extended huge loans to these shell companies without any collateral. However, after Bibler resigned from FME in 2011, the regulator’s appetite for pursuing criminal bankers began to wane.

  • Many guilty parties were released early and allowed to keep their wealth
  • The lack of regulation created a culture where fraudulent activities could thrive

A Warning of Future Crises

The book concludes on a dire note, warning that little has changed in the Icelandic financial sector and that another crash may be imminent. Bibler writes:

  • “Despite the devastation of 2008, the dragon of severely corrupt financial markets has yet to be slain”
  • “Iceland between 2004 and 2008 serves as a preview of future attractions for the world’s major markets”
  • “Today, we find ourselves on the verge of a time bomb”

Overall, Bibler’s book paints a disturbing picture of a financial sector that remains rife with fraud and corruption. The warning signs are there, but it remains to be seen if regulators will take action to prevent another crisis.