Merchants and Trade - Act No 80/1993 on Measures to Counteract Money Laundering

Act
on Measures to Counteract Money Laundering, No. 80/1993, as amended by Act No. 38/1999



CHAPTER I
Application, etc.
Article 1

[This Act shall apply to activities by individuals and legal entities authorised to provide services to the public in this country or abroad and which are covered by one or more of the following:

1. Receiving funds for deposit and other repayable financial assets from the public.
2. Credit activities, including:

a. consumer credits,
b. mortgages,
c. factoring and purchase of debt instruments and
d. commercial credits.

3. Leasing of assets.
4. Clearing of payments.
5. Issue and management of credit cards and other means of payment.
6. Provision of guarantees or collateral for loans.
7. Transactions, on own account or for customers, involving:

a. Payment instruments in money markets (cheques, bills and other comparable payment instruments, etc.),
b. foreign currency,
c. futures and options,
d. exchange rate linked bonds and debt instruments with interest and
e. securities.

f. real estate.

8. Participation in issues of securities and services connected with such issues.
9. Reception of financial assets in connection with the development of equity capital of undertakings or in connection with the purchase, take-over or merger of business undertakings.
10. Money handling, including bureaux de change.
11. Safekeeping, custody and management of securities, including electronic securities.
12. Rental of safety deposit boxes.
13. Securities transactions in accordance with Act on Securities Transactions.
14. Life assurance services and the activities of pension funds.

15. Real estate agency.

16. Shipping brokerage.

17. Trading of precious metals and gems when a particular trading activity exceeds the amount specified in Art. 3.2 or in cases where the amount is lower than that specified in Art. 3.2. and the trading is carried out in a number of inter-related trading activities.

18. Trading of works of art when a particular trading activity exceeds the amount specified in Art. 3.2 or in cases where the amount is lower than that specified in Art. 3.2. and the trading is carried out in a number of inter-related trading activities.

The provisions of the Act shall also apply to parties licensed on the basis of Act No. 6/1926 for conducting lotteries and raffles, and parties permitted by particular legislation to conduct fund-raising activities or lotteries where prizes are paid out.]1)
The Minister may, by Regulation, provide that Articles [7, 8 and 9]1) of this Act shall also apply to other parties carrying out activities which are likely to be used for money laundering.
1) Act No. 38/1999, Article 1.

Article 2

[For the purposes of this Act, money laundering shall refer to actions by which an individual or a legal entity accepts or acquires, for itself or others, gains by means of a violation punishable under the General Penal Code, such as an acquisitive offence or a major tax or narcotics violation, violation of the Customs Act, the Drugs of Abuse Act, the Alcoholic Beverages Act or the Pharmaceuticals Act. The term shall also apply to actions by which an individual or a legal entity undertakes to keep, conceal or transfer such gains, assist in their delivery, or attempts by other comparable means to ensure gain from such punishable offences for others.

For the purposes of this Act, gain shall refer to any type of profit and assets by any name, including documents entitling the bearer access to property or other rights of financial value.
Anyone to whom the provisions of this Act apply is obliged to provide all assistance necessary to ensure that the provisions of the Act may be enforced.] 1)
1) Act No. 38/1999, Article 2.

CHAPTER II
[The Role of Individuals and Legal Entities] 1)
Article 3

[Upon commencing a business activity, in particular upon opening an account or depositing assets for custody, any individual or legal entity referred to in Article 1 shall require a customer to prove its/his/her identity by presenting personal identification documents attesting to the name, legal domicile and national registry number in accordance with a certificate issued by the Statistical Bureau of Iceland or the Director of Internal Revenue. The same shall apply to persons having the power to obligate legal entities in their ordinary operation, as applicable.] 2)
A customer who is not [a regular customer]2) as referred to in paragraph one shall also be required to produce personal identification documents in transactions exceeding a sum equivalent to EUR 15,000, indexed  by reference to the official exchange rate.]2)  In case of entities holding operating licenses pursuant to paragraph two of article one, these amounts shall be equivalent to EUR 1,000, indexed  by reference to the official exchange rate. If the amount is not known at the time of the transaction, or if the transaction is carried out in one or more operations which appear to be connected, the presentation of personal identification documents shall be required as soon as the sum becomes known and it becomes clear that it exceeds the above limit.
If there is suspicion that the origin of assets may be traced to a violation [as referred to in Article 2] 2), the presentation of personal identification documents shall be requested of a customer even for transactions involving amounts less than those referred to in paragraph two.

Upon commencing a business activity regarding distant selling, entering into agreements utilizing distant selling methods or similar methods, additional information on the customer should be acquired, when needed, as well as the requirement that the first payment relating to the business activity should be rendered in the name of the customer debited to a bank account established in a licenced deposit or bank institution. Rules, as required by Art. 10, laid out by individuals or legal entities on their internal controls for their operations, shall contain, when appropriate, provisions on doing business through distant selling methods and on safekeeping of records.  
1) Act No. 38/1999, Article 11. 2) Act No. 38/1999, Article 3.

Article 4

When the customer is [a financial institution holding an operating license within the European Economic Area to provide services referred to in article one, paragraph one, subsections 1 – 12 and 14]1), personal identification documents need not be requested in accordance with article three. The same shall apply in cases where it is established that payment for a transaction is to be debited from an account opened in the customer's name in a similar institution operating within the European Economic Area, unless there is a suspicion that the transaction is connected with [a violation as referred to in Article 2.] 1)
1) Act No. 38/1999, Article 4.

Article 5

Should [an individual or an employee of a legal entity referred to in Article 1]1) know or have reason to suspect that specific transactions are being conducted for the benefit of a third party, he/she shall request that the customer disclose the identity of the third party in question.
1) Act No. 38/1999, Article 5.

Article 6

[An individual or legal entity referred to in Article 1 shall]1) preserve photocopies of personal identification documents required in accordance with Article 3, or adequate information recorded from them, for at least five years after the business relationship […] 1) has ended.
1) Act No. 38/1999, Article 6.

Article 7

[An individual or legal entity referred to in Article 1 is obliged to]1) have any transactions suspected of being traceable to a violation [as referred to in Article 2]1) carefully examined, and shall notify [the National Commissioner of Police]1) of any transaction considered to be so related. Upon the request […]1) of police investigating cases of money laundering, any information deemed necessary on account of [such notification]1) shall be provided.
Transactions shall be avoided when there is knowledge of or reason to suspect that they are traceable to a violation [as referred to in Article 2 and shall be notified to the National Commissioner of Police in accordance with Article 8. The notification shall indicate within what period of time the individuals or legal entities referred to in Article 1 are required to carry out the transaction.]1) If such transaction can not be prevented, or if its suspension could hinder the prosecution of parties benefiting from it, the [National Commissioner of Police]1) shall be notified of the transaction as soon as it has been completed.
1) Act No. 38/1999, Article 7.

[Article 8

The National Commissioner of Police shall confirm in writing the receipt of notifications pursuant to Article 7. The Commissioner may in cases of urgency request that transactions notified in accordance with Article 7 are not carried out until the conclusion of the time limit specified in the notification. The Commissioner shall notify without delay if he sees no need to prevent the transaction.
Individuals and legal entities referred to in Article 1, and their employees, shall be responsible for compliance with the provisions of this Act and of any regulations and rules adopted in accordance with it. They shall nominate a specific individual to be generally responsible for providing notifications in accordance with Article 7 and develop co-ordinated working practices supporting the implementation of this Act. The National Commissioner of Police shall be informed of the nomination of the responsible individual.]1)

The National Commissioner of Police shall give individuals and legal entities access to information of general nature on money laundering and how best to monitor business activity pursuant to this Act.
1) Act No. 38/1999, Article 8.

[Article 9

Individual persons, managers, employees and others working on behalf of a legal entity to which this Act applies are obliged to ensure that the customer or other external party does not become aware that the National Commissioner of Police has been sent information in accordance with Article 7 or that an investigation has been commenced due to a suspected violation referred to in Article 2.] 1)
1) Act No. 38/1999, Article 9.

[Article 10] 1)

[Individuals and legal entities referred to in Article 1]2) shall operate a system of internal control designed to prevent use of their [operations]2) for crime-related transactions. To this end [they shall]2) for instance ensure that their employees receive special training.

For the purpose of employing staff, legal entities referred to in paragraph one of article one shall put in place  specific rules on checking procedures to be used by the entities towards those seeking employment by the entities and in which cases there are grounds to request criminal  record certificates or other similar certificates on past activities and employment. 
1) Act No. 38/1999, Article 8. 2) Act No. 38/1999, Article 10.

CHAPTER III

Miscellaneous provisions
[Article 11

The National Commissioner of Police shall be notified  if the Financial Supervisory Authority or other administrative agencies supervising activities enumerated in Article 1 obtain, in the course of their functions, knowledge of transactions connected with a violation referred to in Article 2, or information on transactions suspected of being related to such violation.] 1)

Legal entities referred to in paragraph one of article one shall pay close attention to those countries or regions not observing international principles and rules on measures to counteract money laundering. The Financial Supervisory Authority shall publish notices or guidelines if the authority deems it necessary that entities show special caution in doing business with countries or regions pursuant to this article.
1) Act No. 38/1999, Article 12.

[Article 12] 1)

[When an individual or legal entity covered by this Act, cf. Article 1, provides police2), in good faith, with information as provided for in this Act, this shall not be deemed in conflict with obligations of confidentiality to which it/he/she may be subject by law or otherwise. Provision of such information shall not make the [individuals, legal entities or employees]2) in question criminally liable or liable for civil damages.
1) Act No. 38/1999, Article 8. 2) Act No. 38/1999, Article 13.

Article 13

The Minister may, by a regulation,1) provide for the implementation of this Act in further detail.
1) Regulation No. 272/1994

Article 14

Fines shall be imposed on account of violations of the provisions of Articles 3, 5, 6, 7, [8, 9 and 10]. 1) Fines shall also be imposed in case of failure to furnish information to […]1) police as provided for in the second sentence of the first paragraph of Article 7.
If a violation of this Act is committed in the course of the operations of a legal entity, the legal entity may be fined irrespective of guilt having been established on the part of the persons in charge or its staff members. If a person in charge of a legal entity or its staff member has become guilty of a violation of this Act, the legal entity may also be fined.
1) Act No. 38/1999, Article 15.

Article 15

This Act shall enter into force 1 July 1993. The provisions of Article 9 shall enter into force six months after that date.