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Iceland’s Banking Sector Seen as Low-Risk for Money Laundering, Report Says

A recent report by a leading international organization has concluded that Iceland’s banking sector poses a relatively low risk when it comes to money laundering. The country’s limited cross-border payments activity and economic fundamentals are cited as key factors in reducing the inherent risk of money laundering.

Factors Contributing to Low Risk Profile

• Limited Cross-Border Payments Activity: Iceland’s foreign trade and direct investments are minimal, resulting in a reduced scope for suspicious transactions.
• Economic Fundamentals: The country’s financial flows are largely explained by its economic activities, making it difficult for criminal organizations to hide their illegal activities.

Low Financial Ties with High-Risk Countries

• Minimal Financial Connections: Iceland has limited financial ties with countries identified as high-risk for money laundering.
• No Outlier Cross-Border Payments or Unexplained Transactions: There is little evidence of outlier cross-border payments or unexplained financial transactions, further supporting the low risk profile.

Implications for Icelandic Banks

The finding comes as a relief for the country’s financial sector, which has been working closely with international authorities to implement robust anti-money laundering and combating the financing of terrorism (AML/CFT) measures. The report is part of an ongoing series of assessments by the organization, aimed at providing insights into the AML/CFT effectiveness of countries around the world.

This low risk profile suggests that Icelandic banks may not be attractive targets for criminal organizations seeking to launder illicit funds.