Íslandsbanki‘s settlement with the Central Bank of Iceland

Pursuant to the Central Bank of Iceland’s on-site inspection of the structure and implementation of anti-money laundering and terrorist financing (AML) measures, carried out in October and November 2022, Íslandsbanki has undertaken reforms in accordance with the Central Bank’s recommendations.

The Bank deeply regrets that vulnerabilities should have come to light, but it reiterates that there is no suspicion that money laundering has taken place via Íslandsbanki’s systems. The Central Bank made comments in a total of 12 items centring on the framework, execution, and supervision of Íslandsbanki’s AML defences. Íslandsbanki conceded to the Central Bank’s comments and asked to conclude the matter with a settlement agreement to be published on the Central Bank website.

In recent years, the regulatory framework for AML measures has been tightened on a regular basis, as customers have noticed, including more detailed risk assessments and more stringent authentication requirements for foreign currency purchases. To a large extent, Íslandsbanki has already responded to demands for reforms in the wake of the Central Bank’s recommendations, and will complete its reforms by end-August 2024.

The Central Bank found a total of 12 flaws in Íslandsbanki’s execution, ranging from somewhat inadequate to materially inadequate. The flaws fall into four main categories, as is described below.

Continued development of anti-money laundering

It is an inalienable part of the bank’s settlement with the Central Bank that it respond to and implement the above-mentioned reforms that the Central Bank has demanded. Therefore, Íslandsbanki will immediately review the reforms undertaken to date and compare them with the Central Bank’s requirements, with the aim of ensuring full compliance with the Central Bank’s demands. The bank intends to complete all required reforms not yet implemented by 6 September 2024. Íslandsbanki’s Internal Auditor will then review the reforms and submit a report on them to the Central Bank.

Thereafter, the bank will continue to develop and strengthen its anti-money laundering defences. The defences shall minimise the risk that Íslandsbanki is used to launder money, and at the same time, the bank will safeguard its service to customers and ensure that customers’ involvement in these defences is as effective as possible.