Financial Crime World

Co-ordination Lacking in Iceland’s Fight Against Money Laundering and Terrorist Financing

Reykjavik, Iceland - A recent report has highlighted the lack of coordination between authorities and the private sector as a major hindrance to Iceland’s efforts to combat money laundering (ML) and terrorist financing (TF).

Insufficient Dissemination of National Risk Assessment

The country’s National Money Laundering and Terrorist Financing Risk Assessment (NRA) has not been widely disseminated to the private sector, leaving financial institutions without clear guidance on ML/TF threats, vulnerabilities, and risks in Iceland. This lack of coordination is negatively affecting the entire AML/CFT regime.

Consequences of Inadequate Coordination

  • Financial institutions are without clear guidance on ML/TF threats, vulnerabilities, and risks.
  • The lack of coordination hinders effective implementation of anti-money laundering (AML) and combating the financing of terrorism (CFT) measures.
  • The entire AML/CFT regime is negatively affected.

Law Enforcement Authorities’ Limited Expertise

Iceland’s law enforcement authorities have developed expertise in investigating financial crimes following the 2008 bank crisis, but ML has not been a priority for them. As a result:

  • There is a lack of resources allocated to identifying, investigating, and prosecuting ML cases.
  • The level of effectiveness in pursuing ML is lower than expected.

Limited Capacity of Financial Intelligence Unit

The Financial Intelligence Unit-Iceland (FIU-ICE) performs operational analysis, but assessors noted a lack of strategic analysis products. This limits the unit’s ability to:

  • Understand ML trends and methods in Iceland.
  • Provide actionable intelligence for law enforcement agencies.

Need for Improved Access to Beneficial Ownership Information

The report highlights the need for improved access to beneficial ownership information and information on non-profit organizations. This is crucial for tracing and seizing the proceeds of crimes.

Lack of Domestic Coordination

There is no comprehensive strategy or mechanism to ensure domestic coordination at the ministerial level or among competent authorities. This hinders the effective implementation of AML/CFT measures.

Inadequate Criminal Investigations and Prosecutions of Terrorist Financing

There have been no criminal investigations or prosecutions of TF in Iceland, and the country’s legal framework for implementing targeted financial sanctions (TFS) is unclear.

Limited Awareness among Financial Institutions

The private sector also lacks awareness of their responsibilities related to TFS for terrorist financing and proliferation of weapons of mass destruction. This hinders effective implementation of AML/CFT measures.

Conclusion

Iceland needs to improve its coordination among authorities and with the private sector to effectively combat ML/TF risks. This includes:

  • Developing a comprehensive strategy
  • Improving access to beneficial ownership information
  • Increasing awareness of TFS responsibilities among financial institutions