From Iceland — FATF: Iceland Needs To Do More To Combat Money Laundering & Terrorist Financing

FATF: Iceland Needs To Do More To Combat Money Laundering & Terrorist Financing

Published October 10, 2019

Andie Sophia Fontaine
Photo by
James Cridland/Creative Commons

The Financial Action Task Force (FATF) has noted that while Iceland has made some improvements when it comes to fighting money laundering and terrorist financing, a new report from them outlines, but still remains not fully compliant in areas the FATF considers crucial, and non-compliant in one area.

According to the report’s findings, Iceland has made strides to become largely or fully compliant with FATF recommendations regarding financial institution secrecy laws, customer due diligence, and the reporting of suspicious transactions, amongst other areas.

However, Iceland is still lacking in some key areas, noting that “authorities still do not have adequate or proportionate sanctions for violations of oversight measures by nonprofit organisations (NPOs) or persons acting on behalf of these NPOs.” Further, the FATF states that “Iceland has not covered all DNFBP sectors (for instance, dealers in precious metals or stones). In addition, while initial work to understand the risk profile of DNFBPs has commenced, risk-based supervision is not carried out across all DNFBPs.”

The FATF also points out that while Iceland’s anti-money laundering legislation “requires additional measures be applied on cross-border correspondent banking relationships ‘with a third-country respondent institution.’ … the term ‘third-country’ does not include countries within the EEA. Similarly, the requirement for [financial institutions] to understand the nature of respondent’s business does not apply to correspondent relationships with EEA countries.”

Most striking, the FATF concludes that “Iceland has not yet developed policies informed by identified risks and the mandate of the Steering Committee does not cover combating the proliferation financing of weapons of mass destruction.”

All this being the case, the Icelandic parliament is still in the process of crafting or trying to pass laws that would strengthen compliance with the FATF’s recommendations. Should this legislation pass, the FATF may adjust its ratings towards Iceland more positively for next year’s assessment.

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