Coordination Lacking in Iceland’s Efforts to Combat Money Laundering and Terrorist Financing

A recent report has highlighted the lack of coordination among authorities as a major hindrance in Iceland’s efforts to combat money laundering and terrorist financing.

Limited Coordination among Authorities

The report found that Icelandic authorities have only recently begun to coordinate their efforts in the context of anti-money laundering and counter-terrorist financing (AML/CFT). However, this coordination is limited, and there is no overarching strategy or mechanism to ensure domestic coordination at the ministerial level or among competent authorities.

Impact on AML/CFT Regime

As a result, there is no consistent understanding of ML/TF risks among competent authorities and the private sector. This lack of coordination has negatively impacted Iceland’s entire AML/CFT regime.

Financial Intelligence Agencies

Financial intelligence agencies in Iceland have access to a wide range of information for investigation purposes, but limited access to beneficial ownership information or information related to non-profit organizations.

Law Enforcement Authorities

Law enforcement authorities in Iceland have shown commitment to tracing and seizing the proceeds of crime, both domestically and abroad. However, there is no coordination among authorities on the increased risk of cross-border transportation or movements of currency.

Terrorist Financing

The report also highlighted that there have been no criminal investigations or prosecutions of terrorist financing in Iceland, despite effective cooperation with other countries’ security services.

Legal Framework

Iceland amended its legal framework in 2016 to implement targeted financial sanctions. However, in practice, it is unclear whether these sanctions are implemented without delay. Similarly, there is a lack of clarity among the private sector on when the freezing obligation enters effect in Iceland.

Supervisory Authorities

Supervisory authorities do not monitor or ensure compliance with targeted financial sanctions for terrorist financing and proliferation of weapons of mass destruction, other than issuing an alert following each update to the government’s list asking whether institutions have frozen any related assets. There is a very low level of awareness among designated non-financial businesses and professions (DNFBPs) and certain financial institutions of their responsibilities related to targeted financial sanctions for terrorist financing.

Recommendations

The report concludes that Iceland needs to strengthen its coordination efforts, improve its understanding of ML/TF risks, and enhance its supervisory framework to effectively combat money laundering and terrorist financing.