Friday, October 30, 2020

Anti-money laundering watchdog adds Iceland to “Grey list”

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Having failed to adequately comply with the recommendations of the FATF (Financial Action Task Force) – concerning anti-money laundering and counter-terrorist financing measures – Iceland has been added to the FATF’s Grey List (along with Mongolia and Zimbabwe).

The FATF met this week in Paris. Sri Lanka, Tunisia, and Ethiopia were removed from the list. Pakistan will remain on the Grey List until February 2020.

According to Vísir, the United States and the United Kingdom fought to put Iceland on the list owing to its lacklustre legislature concerning money laundering and its sluggishness in monetary reform. Iceland reportedly enjoys the full support of the EU, which is keen to keep any EFTA country off the dreaded Grey List.

It is unclear what exactly being Grey Listed means for Iceland. Besides undermining the country’s reputation, the categorisation may also make it more difficult for Icelandic companies to enter into business relations abroad, RÚV reports.

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A Brief Recap

The FATF submitted its report on Iceland in 2018. In response, parliament adopted the European Union’s anti-money laundering directive and worked to address the FATF’s 40 recommendations.

In a follow-up report submitted last year, the FATF encouraged parliament to take further action, seeing as not all of the FATF’s recommendations had been addressed.

As Iceland Review reported last week, parliament enacted two laws last Wednesday to ensure further compliance. The first of the two bills stipulates that organisations that are established for the purposes of distributing funds in the public’s interest and that operate across borders must be registered with the tax authorities (Directorate of Internal Revenue).

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The other law empowers parliament to sell assets that have been confiscated or frozen during a criminal investigation (on certain conditions, such actions may be taken before a ruling is reached in court).

Insiders have pointed out that the situation is a serious indictment of Icelandic governance, which has been slow to respond to FAFT’s demands for monetary reform.

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