Iceland Enhances Supervision of DNFBPs with New Regulatory Body
Reykjavik, Iceland - In a significant move to strengthen its anti-money laundering and combating the financing of terrorism (AML/CFT) framework, Iceland has established a new supervisor within the Directorate of Internal Revenue (DIR) to oversee the whole DNFBP sector.
New Supervisor for Monitoring Law Professionals and Gaming Sector
The new supervisor is responsible for monitoring law professionals and the gaming sector, which had previously been unsupervised. The DIR’s AML/CFT unit has been working closely with other domestic authorities and sister authorities in Scandinavia to set up a surveillance plan and strategy, procedures, standards, and supervisory approach.
Risk-Based Approach
The DIR has taken several steps to deepen its understanding of risks in the sectors it supervises, including:
- Conducting on-site and off-site inspections
- Preparing and publishing extensive guidance material for DNFBPs
- Engaging in dialogue with overseers
- Developing a comprehensive sectoral risk assessment
The sectors are divided into four risk categories: “high”, “significant”, “medium”, and “low”.
Risk Assessment Model
The DIR’s risk assessment model assesses the risk of money laundering and terrorist financing related to the business model of each obliged entity and the quality of its internal rules, controls, and procedures. Factors considered include:
- The nature, scale, and complexity of the entity
- Customer types
- Distribution channels
- Products/services offered
- Geography
Supervisory Activities
The DIR has three full-time employees within its AML/CFT unit, with other divisions providing assistance as needed. Since the requirement to conduct a risk assessment entered into force on June 1, 2019, the DIR has carried out:
- 13 on-site inspections
- 38 traditional off-site inspections
- 60 topic-specific off-site inspections
Money Laundering Investigations
Iceland has prioritized money laundering investigations since 2017, with a significant increase in investigations from 2016 to 2018. The number of investigators/specialists investigating ML and the underlying predicate offence has also increased by 8%. Prosecution rates have been high, with almost all cases leading to conviction.
Conclusion
The establishment of the new supervisor within the DIR is a key step in enhancing Iceland’s AML/CFT framework and ensuring the effective supervision of DNFBPs. The country’s efforts to deepen its understanding of risks and develop a comprehensive risk assessment model demonstrate its commitment to combating money laundering and terrorist financing.