Financial Crime World

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Iceland Takes a Proactive Approach to AML/CFT Supervision

Reykjavik, Iceland - In a significant shift in its approach to anti-money laundering and combating the financing of terrorism (AML/CFT) supervision, Iceland has established a new supervisor within the Directorate of Internal Revenue (DIR).

A New Supervisor for DNFBP Sector

The new supervisor is responsible for overseeing the whole DNFBP sector, including law professionals and the gaming industry, which had previously been unsupervised. This marks a significant change in Iceland’s approach to AML/CFT supervision.

Deepening Understanding of Risks

Since its establishment, the DIR has taken several steps to deepen its understanding of risks in the sectors it supervises:

  • Conducting on-site and off-site inspections
  • Preparing and publishing extensive guidance material for DNFBPs
  • Engaging in dialogue with obligated entities (OEs)
  • Developing a comprehensive sectoral risk assessment

Individual Risk Assessments

The DIR has also developed an individual risk assessment for each obliged entity under its supervision, which is based on various factors such as:

  • EU risk assessment
  • National Risk Assessment (NRA)
  • Information from other competent authorities

These risk assessments are updated annually or when changes occur that may affect the calculation of the respective OE’s risk score.

Risk Assessment Model

The DIR’s risk assessment model assesses the risk of money laundering and terrorist financing related to the business model of each OE and the quality of its internal rules, controls, and procedures. Factors considered include:

  • Nature and scale of the OE
  • Customer types
  • Distribution channels
  • Types of products/services offered
  • Geography

Supervisory Activities

In addition to its supervisory activities, the DIR has also carried out:

  • 13 on-site inspections
  • 38 traditional off-site inspections
  • 60 topic-specific off-site inspections since June 2019

Money Laundering Investigations

Iceland has made significant progress in investigating money laundering cases. According to statistics:

  • ML investigations increased by 511% from 2016 to 2018
  • Number of investigators/specialists investigating ML and the underlying predicate offence has also been increased by 8% since 2017

DIR’s AML/CFT Unit

The DIR’s AML/CFT unit is staffed by three full-time employees, who are supported by other divisions within the DIR when necessary. The unit has developed:

  • Comprehensive sectoral risk assessment of sectors subject to its supervision
  • Individual risk assessments for most obliged entities under its supervision

The unit’s activities are guided by a strategic plan and strategy, procedures, standards, and a supervisory approach that is designed to ensure effective AML/CFT supervision.

Conclusion

Overall, Iceland’s new approach to AML/CFT supervision demonstrates its commitment to combating money laundering and terrorist financing, and its efforts to strengthen its supervisory framework.