Iceland’s Efforts Against Money Laundering and Terrorist Financing Plagued by Lack of Coordination
Reykjavik, Iceland - A recent assessment has revealed that Iceland’s efforts to combat money laundering (ML) and terrorist financing (TF) are hindered by a lack of coordination among competent authorities and the private sector.
Limited Coordination Among Authorities
The report highlights that Icelandic authorities have only recently begun to coordinate their efforts in the context of anti-money laundering and counter-terrorism financing, and that this coordination is largely limited to preparing a National Money Laundering and Terrorist Financing Risk Assessment (NRA). However, there is currently no overarching strategy or mechanism to ensure domestic coordination at the ministerial level or among competent authorities.
Ineffective Measures by Private Sector Entities
As a result, there is a lack of understanding of ML/TF risks among private sector entities, which can lead to ineffective measures to prevent such activities. The report notes that financial intelligence is being used to develop and prosecute major cases related to tax evasion and drug smuggling, but that there is a lack of strategic analysis products to understand ML trends and methods in Iceland.
Low Priority Given to ML Investigations
Furthermore, the report reveals that law enforcement authorities have not prioritized ML investigations, which has resulted in a lower level of effectiveness in pursuing these crimes. Additionally, there is no comprehensive statistics on assets recovered and confiscated, making it difficult to assess the effectiveness of Iceland’s efforts in this area.
Limited Efforts Against Terrorist Financing
In terms of TF, the report notes that there have been no criminal investigations or prosecutions in Iceland, and that there appears to be a lack of consideration of TF vulnerabilities by law enforcement authorities. The report also highlights that there is limited financial investigative expertise allocated to TF matters within the Icelandic police, which may hamper Iceland’s ability to put appropriate emphasis on counter-terrorism financing measures.
Supervisory Authorities’ Inaction
The report also notes that supervisory authorities do not monitor or ensure compliance with targeted financial sanctions for TF and proliferation of weapons of mass destruction, and that there is a lack of awareness among DNFBPs and certain FIs of their responsibilities related to these sanctions.
Preventive Measures Not Implemented Effectively
Finally, the report highlights that preventive measures, such as customer due diligence and record-keeping requirements, are reasonably understood by large commercial banks, but that other financial institutions and DNFBPs have not demonstrated an understanding of ML/TF risks or implemented these measures effectively.
Recommendations for Improvement
The report concludes that Iceland’s efforts to combat ML and TF are hindered by a lack of coordination, priority, and resources. It recommends that the authorities take immediate action to address these issues and strengthen their efforts to prevent and detect ML and TF activities.
- Establish an overarching strategy or mechanism to ensure domestic coordination at the ministerial level or among competent authorities.
- Prioritize ML investigations and improve the allocation of resources to pursue these crimes.
- Develop comprehensive statistics on assets recovered and confiscated to assess the effectiveness of Iceland’s efforts in this area.
- Increase financial investigative expertise allocated to TF matters within the Icelandic police.
- Monitor and ensure compliance with targeted financial sanctions for TF and proliferation of weapons of mass destruction.
- Improve awareness among DNFBPs and certain FIs of their responsibilities related to these sanctions.