The Government of Iceland disagrees with the decision of the Financial Action Task Force (FATF) to place the country on its list of jurisdictions with strategic AML/CFT deficiencies.
The decision is based on FATF’s Follow-up Report and Compliance Re-Rating and the subsequent consideration by FATF Joint Group. Since the completion of FATF’s initial assessment, the Government of Iceland has undertaken a thorough revision of its legal framework in this field and strengthened key institutions.
All the recommended actions deemed outstanding by the FATF have been positively addressed to all or large extent. FATF´s decision is therefore, in Iceland’s view, unwarranted and disproportionate. The authorities expect Iceland to be removed from the list at the next possible opportunity.
During discussions at the meetings in Paris this week, Iceland’s views were met with understanding and support by a significant number of FATF’s members. The FATF noted the commitment of Icelandic authorities to work with the FATF to strengthen the effectiveness of its AML/CFT regime. The FATF also noted that Iceland had already pro-actively taken steps to address these issues before the Action Plan’s formal adoption by FATF but due to their very recent nature the FATF could not yet fully review these. Hence, Iceland will continue undergoing ICRG monitoring on the basis of three remaining issues all of which Iceland considers fully addressed:
- Access to information on basic and beneficial ownership.
In Iceland’s view it has been demonstrated that competent authorities do have access to accurate information on basic and beneficial ownership in a timely manner and the relevant legislation is in place.
- Automated system for registering and filing STR’s in the FIU AML/CFT database and increase the human resources of the FIU.
The system has already been purchased and has been under active implementation since early 2019. Icelandic authorities have increased the staff of the FIU by 5 full-time employees since the mutual evaluation took place.
- Effective supervision of targeted financial sanctions (TFS) compliance and monitoring of non-profit organizations (NPOs).
While the necessary regulatory framework has been in place since 2009, it has been further strengthened through legislation enacted in June 2019. Supervision of TFS obligations is and has been a part of the Icelandic supervisors’ inspections and supervision. The risk in the NPO sector has been assessed and legislation aimed at the NPOs at risk has already been passed.
It is important to note that none of remaining issues directly concern Icelandic financial companies.
The Icelandic authorities expect FATF´s decision to have limited impact on financial institutions. However, the listing may require counterparts of Icelandic entities to undertake increased diligence measures.