Financial Crime World

Lack of Coordination Hampers Iceland’s Fight Against Money Laundering and Terrorist Financing

Reykjavik, Iceland - A recent assessment has revealed that the Icelandic authorities have failed to coordinate their efforts in fighting money laundering (ML) and terrorist financing (TF). The lack of coordination has led to a lack of understanding of ML/TF risks among competent authorities and the private sector.

Insufficient Preparation

According to the assessment, the Icelandic authorities have only recently begun to prepare a National Money Laundering and Terrorist Financing Risk Assessment (NRA), but it has not been widely disseminated to the private sector. As a result, financial institutions and other businesses in Iceland receive very limited guidance on ML/TF threats and risks.

Limited Guidance for Private Sector

  • Financial institutions and other businesses in Iceland lack sufficient information on ML/TF threats and risks
  • NRA has not been widely disseminated to the private sector

Lack of Coordination

The assessment also found that there is no overarching strategy or mechanism to ensure domestic coordination at the ministerial level or among competent authorities. This lack of coordination negatively affects Iceland’s entire anti-ML/TF regime.

Negative Impact on Anti-ML/TF Regime

  • No overarching strategy or mechanism for domestic coordination
  • Lack of coordination affects effectiveness of anti-ML/TF measures

Ineffective Money Laundering Investigations

Furthermore, the Icelandic authorities have not prioritized money laundering investigations, which has resulted in a lower level of effectiveness in pursuing ML cases. The assessment also noted that there is limited access to beneficial ownership information and information on non-profit organizations.

Limited Access to Information

  • Limited access to beneficial ownership information
  • Limited access to information on non-profit organizations

Implementation of Targeted Financial Sanctions

The lack of coordination and understanding of ML/TF risks has also affected Iceland’s ability to implement targeted financial sanctions effectively. There is a lack of clarity among competent authorities on the legal framework for implementing targeted financial sanctions, which can delay their implementation.

  • Lack of clarity among competent authorities on legal framework
  • Delayed implementation of targeted financial sanctions

Supervisory Authorities

Supervisory authorities do not monitor or ensure compliance with targeted financial sanctions for terrorist financing and proliferation of weapons of mass destruction. As a result, there is a very low level of awareness among designated non-financial businesses and professions (DNFBPs) and certain financial institutions (FIs) of their responsibilities related to these sanctions.

Low Awareness of Responsibilities

  • Very low level of awareness among DNFBPs and FIs
  • Lack of understanding of responsibilities related to targeted financial sanctions

Technical Deficiencies

The assessment also found that many FIs and DNFBPs in Iceland do not assess the ML/TF risk to which they are exposed, and have not demonstrated an understanding of any such risks. Additionally, there are technical deficiencies in relation to preventive measures, particularly in relation to politically exposed persons (PEP) and suspicious transaction reports (STRs).

Technical Deficiencies

  • FIs and DNFBPs do not assess ML/TF risk
  • Lack of understanding of preventive measures for PEP and STRs

Conclusion

The lack of coordination and understanding of ML/TF risks is a major concern for Iceland’s financial stability and security. It is essential that the authorities take immediate action to address these issues and ensure effective coordination and implementation of anti-ML/TF measures.

Immediate Action Required

  • Authorities must take immediate action to address lack of coordination
  • Effective coordination and implementation of anti-ML/TF measures required for financial stability and security