Iceland Falls Short in Fight Against Money Laundering and Terrorist Financing

International Experts Highlight Shortcomings

A recent evaluation by international experts has highlighted several shortcomings in Iceland’s efforts to combat money laundering (ML) and terrorist financing (TF). The country’s financial sector is found to be lacking in effective measures to prevent the misuse of its financial system.

Key Findings

• Lack of independence and resources at the Financial Intelligence Unit (FIU), hindering its effectiveness.
• No proactive approach to analyzing suspicious transaction reports (STRs) or producing regular reports on AML/CFT trends.
• Limited success in tackling ML and TF cases, with no clear evidence of FIU’s efforts.
• Law enforcement agencies lacking in investigating and prosecuting ML cases.

Deficiencies in Financial Institutions

• Significant deficiencies in implementing anti-money laundering (AML) and combating the financing of terrorism (CFT) measures.
• Lack of general requirements for identifying beneficial owners.
• Exemptions from customer due diligence (CDD) appear overly broad.
• Limited training for law enforcement officials to deal with ML/TF cases.

Recommendations

• Issuing additional guidance to the financial sector.
• Adopting procedures for evaluating de-listing requests, releasing funds or other assets of persons or entities subject to freezing, and authorizing access to frozen resources.

Conclusion

While Iceland has made progress in implementing AML/CFT measures, there is still much work to be done to ensure the country’s financial system is not exploited by criminals. International experts are calling on Iceland to take a more proactive approach in combating ML and TF.