AML in Iceland

The government has underscored its stance against financial crimes through the issuance of decisions pertaining to Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), and Combating the Proliferation Financing (CPF). Introduced in 2019, these regulations address concerns related to money laundering and terrorist financing. These directives are strategically designed to effectively address and thwart the financing of terrorism and other significant criminal activities. As a result, authorized institutions collaborate extensively, maintaining stringent measures to ensure the highest level of efficacy.

Iceland is not featured on the FATF List of Countries designated with significant Anti-Money Laundering (AML) deficiencies. The FATF acknowledges Iceland’s notable advancements in establishing an AML/Counter Financing of Terrorism (CFT) framework. Iceland has bolstered the efficacy of its AML/CFT regulations and rectified pertinent technical deficiencies, aligning with the commitments outlined in the FATF’s action plan addressing major shortcomings identified in October 2019. This substantial progress has led to Iceland’s removal from the FATF’s heightened monitoring process. Iceland remains committed to working collaboratively with the FATF to further enhance its AML/CFT framework.

The FATF emphasized that although supervisory bodies recognize the risks inherent in their respective sectors, they should extend their audit practices and employ a more robust risk-based approach. Furthermore, Iceland is encouraged to delve into researching and addressing specific risks linked to legal entities and regulations.

Leveraging its “robust legal foundation for investigation and prosecution” and its cooperation with international counterparts, the FATF report conveys a positive perspective. It posits that as Iceland allocates greater resources toward AML/CFT compliance, the nation possesses the capacity to meet recommendations and attain an acceptable level of effectiveness.

The evaluation of money laundering and counter-terrorism financing in Iceland was conducted through the recent 2020 Mutual Assessment Report, aligning with the implementation of FATF regulations. As per this assessment, Iceland achieved compliance for 21 out of the total FATF 40 recommendations, and a considerable level of compliance for 16 recommendations, thereby earning a “Largely Compliant” status.

Iceland boasts a robust coordination mechanism facilitated by the Executive Committee responsible for addressing money laundering and terrorist financing, as designated by the Minister of Justice in accordance with Article 39 of the AML Law. The composition of this committee includes representatives from pertinent ministries, law enforcement agencies, auditors, tax authorities, and other stakeholders.