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Iceland’s Financial Regulators Struggle with Limited Resources

Iceland’s financial regulatory framework has been facing significant challenges due to a lack of experienced staff. A recent review has highlighted the difficulties faced by the country’s regulators, who are struggling to effectively supervise and regulate Iceland’s large and internationally active banking system.

Challenges Faced by Regulators

• The Financial Supervisory Authority (FME) is too small, both in terms of numbers and skills, to keep pace with an increasing number of cases.
• From 860 cases in 2003 to over 1,179 cases in 2007, the agency has struggled to handle the growing workload.
• Former employees of the FME have expressed disappointment and surprise at the outcome of a high-profile insider trading case that was not appealed by the Director of Public Prosecutions.

Overloaded Economic Crime Division

• The Economic Crime Division of the National Commissioner of the Icelandic Police is also struggling with a heavy caseload.
• Despite its best efforts, the division has had to cut back on staff numbers from 17 in 2005 to 13 in 2009.

Taxation Challenges

• The Directorate of Taxation has been grappling with a significant increase in foreign ownership of Icelandic companies, believed to be linked to tax evasion.
• The agency has reported a phenomenal increase in total assets of foreign companies in Iceland and an equally large part of profits going to foreign owners.

Conclusion

It is clear that Iceland’s financial regulators are facing significant hurdles due to limited resources. The country’s authorities must address this issue urgently to ensure the stability and integrity of its financial system.