Iceland’s Anti-Money Laundering and Counter-Terrorist Financing Efforts Fall Short

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Iceland’s efforts to combat money laundering (ML) and terrorist financing (TF) have been found wanting, with a recent assessment revealing a lack of coordination among authorities and the private sector.

Limited Coordination Among Authorities

According to the report, Icelandic authorities have only recently begun to coordinate their efforts in the context of anti-money laundering and counter-terrorist financing (AML/CFT). However, this coordination is limited to preparing a National Money Laundering and Terrorist Financing Risk Assessment. There is currently no overarching strategy or mechanism to ensure domestic coordination at the ministerial level or among competent authorities.

Impact on Private Sector

Limited Guidance Provided

The private sector has received very limited guidance from authorities on ML/TF threats, vulnerabilities, and risks in Iceland. This lack of coordination negatively affects Iceland’s entire AML/CFT regime.

Law Enforcement’s Approach to Money Laundering

While Icelandic law enforcement authorities have developed expertise in investigating financial crimes, money laundering (ML) has not been a priority for them. The lack of resources allocated to identifying, investigating, and prosecuting ML cases results in a lower level of effectiveness in pursuing these crimes.

Limited Access to Information

Beneficial Ownership and Non-Profit Organizations

Access to beneficial ownership information or information related to non-profit organizations is limited, which hinders the ability of authorities to effectively investigate and prosecute financial crimes.

Lack of Strategic Analysis Products

The report also criticizes Iceland’s lack of strategic analysis products, which would assist in understanding ML trends and methods in the country. Additionally, there appears to be a lack of consideration of TF vulnerabilities in Iceland by law enforcement authorities.

Financial Sanctions

Unclear Implementation

Iceland has amended its legal framework to implement targeted financial sanctions, but in practice, it is not clear that these sanctions are implemented without delay. There is also a lack of clarity among the private sector on when the freezing obligation enters effect in Iceland.

Conclusion

While Iceland has made some progress in implementing AML/CFT measures, there is still much work to be done to ensure the effective prevention and detection of ML and TF in the country.