Countries/Jurisdictions of Primary Concern - Iceland
Iceland is not considered a regional financial center. Money laundering in Iceland is related primarily to tax evasion, narcotics smuggling, fraud and economic crimes, and underground casinos. Over the years, very few cases have been registered as pure money laundering cases, mainly due to the unavailability of statistical data. Further, Iceland has not conducted specific typology analyses on suspicious transaction reports (STRs). Financial crimes concerning market manipulation have been prosecuted, but the scale of money laundering involved in such activities is not clear. Criminal proceeds tend to derive from domestic organizations with some linkages to foreign groups. The Economic Crime Unit at the National Commissioner of the Icelandic Police (NCIP) continues to investigate criminal actions in connection with the 2008 collapse of Iceland’s financial system.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: NO
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO
KYC covered entities: Banks; currency exchanges; attorneys; trust, safekeeping, and company service providers; life insurance companies and pension funds; insurance brokers and intermediaries; securities brokers; and dealers of vessels or high-value items
Number of STRs received and time frame: 198: January 1 – June 30, 2014
Number of CTRs received and time frame: Not available
STR covered entities: Banks; currency exchanges; attorneys; trust, safekeeping, and company service providers; life insurance companies and pension funds; insurance brokers and intermediaries; securities brokers; and dealers of vessels or high-value items
money laundering criminal Prosecutions/convictions:
Prosecutions: Not available
Convictions: 1 in 2014
Records exchange mechanism:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Iceland is a member of the FATF. Its most recent mutual evaluation can be found at: http://www.fatf-gafi.org/documents/documents/mutualevaluationoficeland.html
Enforcement and implementation issues and comments:
The Government of Iceland has improved its AML/CFT regime through the implementation and enforcement of existing laws. Iceland does have a legal framework that allows authorities to freeze terrorist assets in a timely manner; however, all orders to freeze assets must have prior judicial approval. The country does not have asset sharing capabilities.
The NCIP merged with the Office of the Special Prosecutor (OSP) in 2012. The NCIP faces a decrease in its budget in the 2015 budget bill. The budget bill states the OSP budget will need to be reduced approximately 50 percent in 2015, or by 423 million ISK (approximately $3.43 million). OSP expects to decrease its operations extensively in 2015, which will be its last operational year based on act No. 135/2008 on the OSP. OSP will need to lay off 16 people out of 66 and stop investigating some cases if no changes are made to the budget bill. According to a supplemental bill, written in mid-November 2014 and now being discussed in the parliament, the OSP will receive additional funding to help finalize investigations on older cases. The OSP would receive more than the budget bill proposes but would still be subject to a reduction of 58 million ISK (approximately $470 thousand) instead of 423 million ISK (approximately $3.43 million).
The NCIP operates the financial intelligence unit (FIU), which oversees AML/CFT matters. The FIU participates in the interagency committee on measures against money laundering. The FIU reports its primary challenges are a shortage of staff and funding. In addition, the lack of special infrastructure prevents them from registering and analyzing STRs. The FIU says there is, and always has been, a lack of expertise in the FIU. In Iceland, the National Police Investigation Division investigates predicate offenses, money laundering, and terrorism financing. The FIU continues to work with the commercial banks, life insurance companies, and securities brokers to educate staff on AML matters. According to the FIU, even though considerable progress has been made in this area and most reporting parties now understand their obligations, non-financial institutions appear to lag in meeting the reporting requirements. In comparison to the previous year, the number of STRs filed with the FIU fell dramatically in 2014.
Under Icelandic law, real estate agents and auditors are not subject to supervision by a public authority. The Government of Iceland should appoint supervisory authorities to effectively monitor these service providers, and they should be required to file STRs. The FIU should continue educating reporting entities regarding measures against money laundering. The government also should continue to enhance policies and procedures as appropriate and should implement a domestic mechanism to allow designation of terrorists at a national level as well as to give effect to designations and asset freeze requests from other countries.