Iceland’s measures to fight money laundering and the financing of terrorism and proliferation

Publication details

Language

English

French

Country

Iceland

Mutual Evaluation Report of Iceland - 2018

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MER-Iceland.pdf
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2 MB
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application/pdf
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Paris, 6 April 2018 – Iceland needs better internal cooperation and coordination to effectively tackle money laundering and terrorist financing.

The FATF conducted an assessment of Iceland’s anti-money laundering and counter-terrorist financing (AML/CFT) system. The report is a comprehensive review of the effectiveness of Israel’s measures and their level of compliance with the FATF Recommendations.

Between 2008 and 2015, Iceland demonstrated a high level of cooperation and coordination as they focused almost exclusively on the financial crimes and complex cases surrounding the 2008 banking collapse. But, this did not extend to anti-money laundering and counter terrorist financing, which has not received sufficient attention as a result.

Icelandic authorities have a fragmented understanding of AML/CFT risks, which is not used for further policy development.  Although supervisors are beginning to identify areas of risk relevant to their sectors, they need to further enhance their supervisory roles and their use of the risk-based approach. Iceland should also explore the specific risks associated with legal persons and arrangements and improve the availability of beneficial ownership information.

With the exception of the three large commercial banks in Iceland, the financial sector and non-financial businesses and professions have a poor understanding of the money laundering or terrorist financing risks to which they are exposed. These private sector entities have limited awareness of their AML/CFT obligations and report very few suspicious transactions in light of the risks present. 

Icelandic authorities cooperate well with counterparts in other countries, particularly their Nordic neighbours, both seeking and providing information on a wide range of cases.

Iceland has a sound legal framework for investigation and prosecution of money laundering. Recently, there has been an upward trend in the number of money laundering prosecutions. Iceland is committed to trace and seize the proceeds of crime, both in Iceland and abroad. However, despite the presence of some relevant risk factors, Iceland has not conducted any criminal investigations into terrorist financing, although it has contributed intelligence to investigations initiated by foreign counterparts. 

Iceland must use its ability to coordinate domestic authorities and put practices in place to strengthen its efforts to tackle money laundering and terrorist financing. During the assessment, the country demonstrated a commitment to take the necessary action to do so and the FATF welcomes the steps that country has already taken since that time.

The FATF adopted this report at its Plenary meeting in February 2018.

 

Mutual Evaluation Report of Iceland, 2018 - Executive Summary

Earlier report on Iceland’s measures to combat money laundering and terrorist financing

More information:  

The FATF Recommendations

FATF Methodology for assessing compliance with the FATF Recommendations and the effectiveness of AML/CFT systems

Consolidated assessment ratings - an overview of ratings that assessed countries obtained for effectiveness and technical compliance.

 

 

 

Technical Compliance

Ratings which reflect the extent to which a country has implemented the technical requirements of the FATF Recommendations.

Iceland Mutual Evaluation - 2018

R.1 - Assessing risk & applying risk-based approach
PC
R.2 - National cooperation and coordination
PC
R.3 - Money laundering offence
C
R.4 - Confiscation and provisional measures
LC
R.5 - Terrorist financing offence
LC
R.6 - Targeted financial sanctions related to terrorism & terrorist financing
PC
R.7 - Targeted financial sanctions related to proliferation
PC
R.8 - Non-profit organisations
NC
R.9 - Financial institution secrecy laws
LC
R.10 - Customer due diligence
PC
R.11 - Record keeping
C
R.12 - Politically exposed persons
PC
R.13 - Correspondent banking
PC
R.14 - Money or value transfer services
LC
R.15 - New technologies
PC
R.16 - Wire transfers
PC
R.17 - Reliance on third parties
PC
R.18 - Internal controls and foreign branches and subsidiaries
PC
R.19 - Higher-risk countries
PC
R.20 - Reporting of suspicious transactions
LC
R.21 - Tipping-off and confidentiality
C
R.22 - DNFBPs: Customer due diligence
PC
R.23 - DNFBPs: Other measures
PC
R.24 - Transparency and beneficial ownership of legal persons
PC
R.25 - Transparency and beneficial ownership of legal arrangements
PC
R.26 - Regulation and supervision of financial institutions
PC
R.27 - Powers of supervisors
LC
R.28 - Regulation and supervision of DNFBPs
NC
R.29 - Financial intelligence units
LC
R.30 - Responsibilities of law enforcement and investigative authorities
C
R.31 - Powers of law enforcement and investigative authorities
C
R.32 - Cash couriers
PC
R.33 - Statistics
LC
R.34 - Guidance and feedback
PC
R.35- Sanctions
PC
R.36 - International instruments
LC
R.37 - Mutual legal assistance
LC
R.38 - Mutual legal assistance: freezing and confiscation
LC
R.39 - Extradition
LC
R.40 - Other forms of international cooperation
LC

C = compliant   |   LC = largely compliant     |   PC = partially compliant   |   NC = non-compliant

Effectiveness

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Ratings that reflect the extent to which a country's measures are effective. The assessment is conducted on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.

Iceland Mutual Evaluation - 2018

IO1
LE
IO2
SE
IO3
LE
IO4
LE
IO5
LE
IO6
ME
IO7
ME
IO8
ME
IO9
ME
IO10
LE
IO11
LE

HE = high level of effectiveness   |   SE = substantial level of effectiveness    |   ME = moderate level of effectiveness   |   LE = low level of effectiveness