Title: Iceland’s Financial Crimes Risk Assessment: Money Laundering and Terrorist Financing Threats
Subtitle: A Comprehensive Analysis by the National Commissioner of the Icelandic Police
December 2023
In a significant move to strengthen Iceland’s financial defenses, the National Commissioner of the Icelandic Police (NCIP) has released the fourth financial crimes risk assessment for the country. This report covers Money Laundering (ML) and Terrorist Financing (TF) threats, following the last publication in 2021.
1. Preface
The NCIP provides an insightful preface into Iceland’s collaboration with the Financial Action Task Force (FATF) since 1991. Since then, Iceland has adapted its legislation to FATF’s guidelines and recommendations. In 2018, a mutual evaluation report by FATF revealed weaknesses in Iceland’s ML and TF defenses and urged the country to conduct a comprehensive risk assessment. Iceland continues its efforts to meet FATF’s standards with this latest assessment.
2. Main Conclusions
The risk assessment categorizes risk factors as follows:
Money Laundering Risks
- Tax fraud
- Cash transactions
- Crypto-assets
- Financial market players
- Specialists (attorneys, accountants, etc.)
- Gambling
- Company operations
Risks remain primarily unchanged for most of these categories:
- offenses like tax fraud and cash transactions, whose risks are deemed very high
- crypto-assets and specialists
Terrorist Financing Risks
- Transport of assets to and from Iceland using the financial system
- Transport of assets using money remittances
- Operation of non-profit organizations across borders
Risks are medium for the first two factors and low for the operation of non-profit organizations.
3. Introduction
Several international events and technological changes have affected Icelandic society and financial practices. Population growth and the emergence of digital financial services monitored by other states represent new challenges for ML/TF monitoring and prevention.
4. Risk Assessments
Assessments for various categories:
- Tax fraud, cash, crypto-assets, financial market players, specialists, gambling, company operations
Tactics and methods used by ML/TF offenders for each of these categories
Mitigation and prevention measures employed by Icelandic authorities
Certain categories, such as cash, crypto-assets, and gambling on the internet, display significant concerns due to poor monitoring and oversight.
5. Experts and Specialists
The use of specialists, including attorneys, accountants, real estate agents, etc., in ML/TF activities is considered a high risk.
6. Terrorist Financing Risks
Though no confirmed terrorism cases or ML charges have emerged in Iceland, there is a medium risk for the following factors:
- Transport of cash across borders
- Transport of assets to and from Iceland through the financial system
- Transport of assets using money remittances
- Non-profit organizations operating across borders
The risk from terrorism financing remains low.
7. Sources and References
This article concludes by citing sources and references for further investigation.