Financial Crime Risk Assessment Methods Prove Crucial in Iceland’s Fight Against Money Laundering and Terrorist Financing

As Icelandic financial institutions strive to maintain adequate control and prevent their activities from being misused for illicit purposes, a risk assessment policy has emerged as a vital tool.

The Importance of a Risk Assessment Policy

A risk assessment policy serves as a foundation for the companies’ defenses, outlining the culture and values that must be upheld by employees to prevent money laundering and terrorist financing. It is essential that this policy is discussed and agreed upon by all stakeholders involved.

Key Components of a Risk Assessment Policy

According to experts, the policy should include:

• A clear definition of roles and responsibilities among individual employees and units to ensure a coordinated approach to mitigating risk.
• Provisions for developing and updating policies, controls, and procedures, including methods for:
  • Due diligence
  • Reporting of suspicious transactions
  • Internal controls
  • Appointment of an AML/CFTR compliance officer

Regulatory Requirements in Iceland

Icelandic obliged entities are required to have internal rules and procedures in place for conducting:

• Due diligence
• Ongoing monitoring
• Examination of suspicious and unusual transactions
• Monitoring of individuals who may be at risk due to their political exposure and those on sanctions lists

Additionally, notifications must be made to the Financial Intelligence Unit (FIU), and employees’ qualifications must be examined.

The Role of Designated Supervisors

The designated supervisor of measures against money laundering and terrorist financing plays a crucial role in ensuring that policies, rules, and procedures are implemented effectively. This includes promoting coordinated working methods and good implementation of the law.

Senior Management Approval and Monitoring

Senior management approval and monitoring of policies, controls, and procedures are essential for maintaining compliance.

Conclusion

In light of these regulations, it is clear that conducting a risk assessment for money laundering and terrorist financing is a critical step in Iceland’s efforts to combat financial crime. By implementing effective risk assessment methods, Icelandic financial institutions can ensure they are adequately equipped to prevent their activities from being misused for illicit purposes.