Financial Crime World

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Iceland’s AML/CFT Regime Lacks Coordination and Consistency

A recent assessment has revealed that Iceland’s efforts to combat money laundering and terrorist financing (ML/TF) are hindered by a lack of coordination and consistency among competent authorities and the private sector.

Lack of Coordination and Consistency

According to the report, Icelandic authorities have only recently begun to coordinate their efforts in the context of anti-money laundering and combating the financing of terrorism (AML/CFT). While a national AML/CFT steering group exists, it has not yet functioned as a national policy and coordination unit. This lack of coordination has negatively impacted Iceland’s entire AML/CFT regime.

Limited Guidance Provided to Private Sector

The report also found that the results of Iceland’s National Money Laundering and Terrorist Financing Risk Assessment (NRA) were not widely disseminated to the private sector, resulting in limited guidance being provided by authorities on ML/TF threats, vulnerabilities, and risks in Iceland. Financial institutions and other stakeholders have expressed concerns about the lack of clarity on these issues.

Iceland’s legal and institutional framework for investigating and prosecuting money laundering is considered good, with investigative and prosecutorial authorities having developed expertise in financial crimes following the 2008 bank crisis. However, ML has not been a priority for Icelandic authorities, resulting in a lower level of effectiveness in pursuing ML cases.

Additional Challenges

The report also highlighted issues related to:

  • Access to beneficial ownership information
  • Non-profit organizations’ data
  • Lack of strategic analysis products to understand ML trends and methods in Iceland

Terrorist Financing Concerns

In terms of terrorist financing, there have been no criminal investigations or prosecutions in Iceland, despite effective cooperation with other countries’ security services. The country’s legal framework for implementing targeted financial sanctions is also unclear, leading to confusion among competent authorities and the private sector.

Recommendations

The assessment concluded that Icelandic authorities should prioritize improving coordination and consistency in their AML/CFT efforts, as well as increasing awareness of ML/TF risks among the private sector and strengthening supervision and enforcement mechanisms.