Currency exchange service

The Central Bank supervises to ensure that the activities of currency exchange services, which are considered as obliged entities, comply with Act No.140/2018 (in Icelandic)on Measures against Money Laundering and Terrorist Financing, cf. Chapter X of the Act.

A currency exchange service is to be understood as an activity where the purchase and sale of domestic and foreign currency is carried out for commercial purposes, cf. point 8 of Article 3 of the Act.

According to the risk assessment of the National Commissioner of the Icelandic Police, published in March 2021, the risk in foreign exchange transactions is significant. In assessing the risks, there was evidence that it was quite common for offenders to use currency exchange to launder money. The proportion of cash transactions in foreign exchange transactions is high, but cash transactions enable the source of capital to be hidden and, to some extent, facilitate anonymous transactions that can be repeated by the same customer. The risk assessment of the National Commissioner of the Police also states that there are indications that this type of transaction takes place in an organised manner.

Currency exchange services must be registered, cf. Article 35 of the Act and Rules No. 151/2023 (in Icelandic) and No. 152/2023 (in Icelandic), but parties that provide such services and satisfy all of the following conditions are exempted, cf. item i of the first paragraph of Article 2 of the same Act:

Currency swaps are ancillary activities that are directly related to the party’s main activities and only provided to the party's customers, the total turnover of foreign exchange transactions amounts to less than ISK 5 million per year, and currency exchanges for an individual customer do not exceed ISK 100,000, whether the transaction takes place in a single transaction or several that seem to be related to each other.

More detailed information on the registration of currency exchange services can be found here:

1. Cur­rency swaps are an­cil­lary activ­it­ies that are dir­ectly re­lated to the party’s main activ­it­ies and only provided to the party's cus­tom­ers
2. The total turnover of for­eign ex­change trans­ac­tions amounts to less than ISK 5 mil­lion per year
3. Cur­rency ex­changes for an in­di­vidual cus­tomer do not ex­ceed ISK 100,000, whether the trans­ac­tion takes place in a single trans­ac­tion or sev­eral that seem to be re­lated to each oth­er.