FATF Status

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

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 has a low tolerance for corruption, ranking 19 out of 180 on Transparency International’s Corruption Perceptions Index in 2023, and has signed international anti-corruption agreements. While isolated cases of corruption exist, they do not significantly hinder foreign investment, although the Group of States Against Corruption (GRECO) has noted deficiencies in Iceland's anti-corruption policies and compliance with recommendations. The Icelandic government has implemented measures such as a Code of Conduct for public officials and laws against conflicts of interest, but challenges remain, particularly in the wake of financial scandals that have revealed institutional weaknesses.

Iceland has an advanced economy primarily driven by fisheries, tourism, and aluminum production, with significant U.S. investment in the aluminum sector and growing interest in tourism. The country has seen a remarkable recovery in tourism, rebounding from a pandemic-induced decline to over 2.2 million visitors in 2023, and is projected to attract 2.4 million tourists 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 maintains an open investment climate, with the government recognizing foreign direct investment (FDI) as vital for economic prosperity and innovation. The public-private agency "Invest in Iceland" promotes foreign investment by providing information and incentives, particularly in key sectors such as tourism, energy, and life sciences. Despite some restrictions in specific industries, Iceland offers various incentives to attract foreign investors, making it an appealing destination for investment.