Iceland Strengthens Anti-Money Laundering and Counter-Terrorist Financing Supervision

Revamping Approach to Supervising DNFBPs

Iceland has taken a significant step by establishing a new supervisor within the Directorate of Internal Revenue (DIR) to oversee the entire Designated Non-Financial Businesses and Professions (DNFBP) sector, including law professionals and the gaming industry. This move aims to enhance the country’s anti-money laundering and counter-terrorist financing supervision.

Key Steps Taken by DIR

• Visited sister authorities in Scandinavia
• Cooperated with domestic authorities
• Prepared extensive guidance materials for DNFBPs
• Engaged in dialogue with overseas entities
• Conducted seminars and presentations
• Carried out on-and off-site inspections

Risk-Based Approach to Supervision

The DIR has developed a comprehensive risk-based approach to supervise obliged entities (OE) subject to its supervision. The sectors are categorized into four risk levels: “high”, “significant”, “medium”, and “low”. The DIR’s individual risk assessments consider various factors, including:

• EU risk assessments
• National risk assessments
• Sectoral risk assessments
• Information from other competent authorities

The risk score is calculated manually but will soon be automated using an IT tool.

Factors Considered in Assessing Individual OE Risks

• Nature, scale, and complexity of the business model
• Customer types
• Distribution channels
• Products/services offered
• Geography
• Quality of internal rules, controls, and procedures

AML/CFT Unit and Inspections

The DIR’s AML/CFT unit has three full-time employees, with other divisions providing assistance when needed. Since the requirement to conduct risk assessments took effect on June 1, 2019, the DIR has:

• Conducted 13 on-site inspections
• Carried out 38 traditional off-site inspections
• Completed 60 topic-specific off-site inspections

Money Laundering Investigations and Prosecutions

Money laundering investigations have been a priority in Iceland since 2017. The number of ML investigations increased significantly from 2016 to 2018 by 511%. This surge can be attributed to:

• A more focused approach on money laundering
• Increased investigative resources
• Anti-money laundering training for investigators

Table: Money Laundering Investigations and Prosecutions in Iceland

With these measures, Iceland is strengthening its efforts to combat money laundering and terrorist financing.