Iceland’s Anti-Money Laundering Laws Under Scrutiny: A Follow-Up Report

The Financial Action Task Force (FATF) has recently evaluated Iceland’s progress in implementing anti-money laundering laws and regulations. The report, published in 2021, assesses the country’s compliance with international standards in various areas.

Compliance Highlights

Iceland has made significant strides in:

Assessing risk and applying a risk-based approach (R.1)
Implementing targeted financial sanctions related to terrorism and terrorist financing (R.6)
Compliance by financial institutions with customer due diligence requirements (R.10) and record-keeping obligations (R.11)

Challenges and Non-Compliance

However, Iceland has struggled with:

Confiscation and provisional measures (R.4), which are not fully compliant
Regulations related to non-profit organizations (R.8), which require improvement
Laws governing financial institution secrecy (R.9), which need enhancement

Partial Compliance

Iceland is partially compliant in areas such as:

Correspondent banking (R.13)
Money or value transfer services (R.14)
Wire transfers (R.16)

Additionally, the country’s reliance on third parties for certain aspects of its anti-money laundering regime (R.17) raises concerns.

International Cooperation

Despite these challenges, Iceland has made significant progress in implementing international instruments, including:

Mutual legal assistance (R.37)
Freezing and confiscation (R.38)
Extradition (R.39)
Other forms of cooperation (R.40)

Conclusion

The FATF report concludes that Iceland’s anti-money laundering laws are largely compliant with international standards, but there is still room for improvement in certain areas. To ensure its financial system remains robust against money laundering and terrorist financing threats, the country will need to address these shortcomings.

By implementing the necessary reforms, Iceland can strengthen its anti-money laundering regime and maintain a secure financial environment for its citizens and businesses.