Act on Amendment to the Act on Foreign Exchange No 87/1992, as amended
Although every effort has been made to have this translation complete and accurate, should there be any discrepancy between texts, only the official Icelandic text as published in the Official Journal of Iceland, Stjórnartíðindi, is authentic
Article 1
Four new Articles, 15a to 15d, shall be added after Article 15 of the Act and read as follows:
a. (Article 15a)
If a violation of this Act, or of rules based on it, is suspected, the Central Bank of Iceland (CBI) shall notify the Financial Supervisory Authority (FME) thereof. A copy of evidence concerning the alleged infringement shall be attached to the notification of the CBI. The provisions of Chapters IV–VII of the Administrative Procedures Act shall not apply to a decision of the CBI to notify the incident to the FME. The CBI is authorised to provide the FME with information and evidence obtained by the bank in relation to the infringements specified in paragraph 2. The FME is authorised to impose administrative fines on anyone violating rules based on:
1. Rules adopted pursuant to Article 3 on the restriction or suspension of certain short-term capital movements for up to six months,
2. Article 4 on restrictions upon foreign exchange transactions relating to capital movements for direct investments by non-residents in business operations, sale or purchase by non-residents of shares in domestic enterprises, and real estate purchases in Iceland by non-residents,
3. Article 10 on the obligations of parties conducting foreign exchange transactions to have readily accessible information about such services,
4. Article 11 on the obligations of parties to respect the wishes of a client to complete a specific transfer,
5. Article 12 on the time limit to complete such transfer,
6. Article 15 on confidentiality.
Fines imposed on natural persons may range in amount from ISK 10 000 to ISK 20 000 000. Fines imposed on legal persons may range in amount from ISK 50 000 to ISK 75 000 000. The determination of fines, shall, inter alia, take account of the seriousness of the violation, its duration, the violating party´s willingness to co-operate, and whether the is a repeated offence. Decisions on administrative fines shall be made by the Board of the Financial Supervisory Authority and are enforceable by law. Fines shall accrue to the State Treasury, net of the cost of collection. If administrative fines are not paid within one month from the decision of the Financial Supervisory Authority, penalty interests shall be paid on the amount of the fine. The determination and calculation of penalty interests shall be governed by the Act on Interest Rates and Price Indexation. Administrative fines shall be imposed irrespective of whether the infringement was committed with intent or through negligence.
b. (Article 15b)
If the party has violated the provisions of this Act, or rules based on it, the Financial Supervisory Authority may conclude the matter by a settlement with the consent of the parties to the case, provided that no major violation is involved which is subject to punitive sanctions. A settlement is binding for the party involved once it has been accepted and its substance confirmed by the party´s signature. The Financial Supervisory Authority will establish further rules on the implementation of this provision.
c. (Article 15c)
In proceedings directed against a natural person, which may potentially conclude with the imposition of an administrative fine or formal charges to the police, a person reasonably suspected of violation of the law is entitled to refuse to answer questions or surrender any documents or any other effects, unless it is possible to exclude the possibility that this may have significance for the determination of his or her violation. The Financial Supervisory Authority shall advise the suspect of this right.
d. (Article 15d)
The power of the Financial Supervisory Authority to impose administrative fines pursuant to this Act, or rules based on it, shall lapse when five years have passed from the time that the conduct ceased.
The limitation pursuant to the first paragraph is interrupted when the Financial Supervisory Authority notifies the party of the start of an investigation of the alleged violation. The interruption of the limitation has legal effects for all the parties involved in a violation.
Article 2
Article 16 of the Act shall read as follows: Violation of the following provisions is subject to fines or up to two years´ imprisonment, if there are no more severe sanctions under other legislation:
1. Rules adopted pursuant to Article 3 on the restriction or suspension of certain short-term capital movements for up to six months,
2. Article 4 on restrictions upon foreign exchange transactions relating to capital movements for direct investments by non-residents in business operations, sale or purchase by non-residents of shares in domestic enterprises and real estate purchases in Iceland by non-residents,
3. Article 15 on confidentiality.
Article 3
The following two Articles, Article 16 a and Article 16 b, shall be added after Article 16 of this Act
a. (Article 16a)
Violations of this Act and of rules based on it, which are subject to fines or imprisonment are subject to sanctions whether committed by intent or negligence.
Direct or indirect profit gained by a violation of the provisions of this Act which is subject to fines or imprisonment may be confiscated by a judgment of a court of law.
Attempted violations or participation in violations to this Act are punishable under the provisions of the General Penal Code.
b. (Article 16b)
Violations of this Act and rules based on it are subject to criminal investigation only following charges submitted by the Financial Supervisory Authority to the police.
If an alleged violation of this Act and of rules based on it is subject to both administrative fines and penal sanctions, the Financial Supervisory Authority shall assess whether the case should be referred to the police or conclude by an administrative decision of the Authority. If the violations are major, the Financial Supervisory Authority is required to refer the to the police. A violation is considered major if it involves significant amounts, if the violation is of a particularly gross nature or under any conditions that significantly aggravate the crimilality of the violation. Furthermore, the Financial Supervisory Authority may at any stage of an investigation refer a violation of this Act for criminal investigation. Consistency shall be maintained in the resolution of comparable cases.
Referrals of the Financial Supervisory Authority shall be accomapnied by the documents on which the suspicion of violation is based. The provisions of Chapters IV–VII of the Administrative Procedures Act shall not apply any decision of the Financial Supervisory Authority to refer a case to the police.
The Financial Supervisory Authority is permitted to supply the police and the prosecuting authorities with information and documents obtained by the Authority and relating to the violations specified in the second paragraph. The Financial Supervisory Authority is permitted to participate in police actions relating to their investigation of the violations specified in the second paragraph.
The police and the prosecuting authority are premitted to supply the Financial Supervisory Authority with information and documents obtained by the police and relating to the violations specified in the second paragraph. The police is permitted to participate in actions taken by the Financial Supervisory Authority relating to investigation of the violations specified in the second paragraph.
If the prosecutor is of the opinion that there are no grounds for legal action in relation to alleged criminal conduct, which is also subject to administrative sanctions, the prosecutor may refer the case back to the Financial Supervisory Authority for process and decision.
Article 4
In Article 17 of the Act the following sentences are added: The Central Bank of Iceland shall monitor that the activities of parties are in accordance with this Act. The FME shall investigate the cases notified to it by the CBI.
Article 5
This Act shall enter into force immediately. Notwithstanding Article 8 (2) of the Act on the Official Gazette and the Legal Gazette, this Act is binding to all parties as of its publication.
Transitional provision.
Notwithstanding the provisions of Article 2 of the Act and Article 9 of the Act on Investment by Non-residents in Business Enterprises, the Central Bank of Iceland is authorised, until 30 November 2010, to adopt rules, subject to the agreement of the Minister of Business Affairs, which restrict or temporarily suspend any or all of the following categories of capital movements and related foreign exchange transactions, if the Bank considers that such movements of capital to and from the country would cause serious and significant instability in exchange rates and monetary issues:
1. Transactions with and the issue of securities, units in securities funds and investment funds, money-market instruments and other transferable financial instruments.
2. Deposits into and withdrawals from accounts with depositary institutions.
3. Lending, borrowing and issue of guarantees not related to international trade in goods and services.
4. Import and export of securities and domestic and foreign currency.
5. Forward transactions, derivative transactions, trade in options, currency swaps and interest rate swaps, and other related foreign exchange transactions, in which the Icelandic króna is one of the denominated currencies.
6. Presents and grants and other capital movements corresponding to those listed in paragraph 1 to 5.
The Central Bank of Iceland is authorised, subject to the agreement of the Minister of Business Affairs, to adopt rules obliging domestic parties to surrender foreign currency acquired by the sale of goods and services or by other means.
The provisions of Article 7 of the Act shall apply to the authorisations of the Central Bank of Iceland to grant exemptions from the rules established pursuant to paragraph 1. No fee shall be collected for the granting of such exemptions.
Rules according to paragraph 1 and 2 shall be published in the B Series of the Official Gazette and shall be reviewed at least every six months following their publication.
Penalties and administrative fines due to infringement of this provision shall be as stipulated in Article 15 (a) to (d), Article 16, and Article 16 (a) and (b).