Iceland Country Summary

FATF Status

Iceland is no longer on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement - 23 October 2020

The FATF welcomes Iceland’s significant progress in improving its AML/CFT regime. Iceland has strengthened the effectiveness of its AML/CFT regime and addressed related technical deficiencies to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in October 2019. Iceland is therefore no longer subject to the FATF’s increased monitoring process. Iceland will continue to work with the FATF to improve further its AML/CFT regime.

Compliance with FATF Recommendations

The latest follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Iceland was undertaken in 2021. According to that Evaluation, Iceland was deemed Compliant for 22 and Largely Compliant for 16 of the FATF 40 Recommendations. It remains Highly effective for 0 and Substantially Effective for 1 of the Effectiveness & Technical Compliance ratings.

Iceland experiences isolated cases of corruption, but these do not significantly hinder foreign investment, as evidenced by its ranking of 19 out of 180 on Transparency International's Corruption Perceptions Index in 2023. Although Iceland has signed international anti-corruption agreements and established a Code of Conduct for government staff, the Group of States Against Corruption (GRECO) has noted a lack of a comprehensive anti-corruption policy and insufficient compliance with its recommendations. The Icelandic parliament has taken steps to address conflicts of interest among senior officials, but challenges remain in effectively implementing anti-corruption measures.

Iceland has an advanced economy primarily driven by fisheries, tourism, and aluminum production, with significant U.S. investments in the aluminum sector and growing interest in tourism. The country has seen a remarkable recovery in tourism, rebounding from the COVID-19 pandemic to attract over 2.2 million visitors in 2023, and is projected to reach 2.4 million in 2024. Additionally, Iceland's focus on innovation and renewable energy, particularly in the IT and biotech sectors, positions it as an attractive market for foreign investment.

Iceland has an open investment climate, supported by the government’s recognition of foreign direct investment (FDI) as crucial for economic prosperity and innovation. The public-private agency "Invest in Iceland" promotes investment by providing information and incentives, particularly in key sectors such as tourism, energy, and life sciences. Recent years have seen a steady increase in U.S. portfolio investments, bolstered by Iceland's strategic location and favorable business environment.