Financial undertakings

Icelandic financial undertakings operate in compliance with Act no. 161/2002 on Financial Undertakings.The function of the Central Bank of Iceland is inter alia to have foresight and a risk-oriented supervision of the activities of financial undertakings, in particular with regard to the main risk factors. In this way, the Central Bank contributes to their financial health, sound and proper business practices, and ensures that the public and undertakings have continuous access to sound financial services.

Among other things, the Central Bank is responsible for the following elements:

• To ensure that regulated entities are financially sound, managed professionally and aware of the risks of their operations.
• To ensure that regulated entities operate in accordance with applicable laws and regulations, and that they apply sound and proper business practices and respond to deviations in an appropriate manner.
• To analyse and have a clear overview of the risk factors in the activities of regulated parties, monitor important influencing factors in their activities and take appropriate measures.
• To maintain regular and forward-looking, proactive supervision which is risk-oriented and founded on risk analysis and a targeted supervision plan.
• To develop supervision methodologies in accordance with international standards, applicable laws and regulations and technology at any given time.
• To ensure that regulated entities are informed of the nature of changes in laws and regulations, the expectations behind them and that they are in a position to comply with them.
• To ensure it is an active participant in discussions on issues related to the banking sector.
• That it actively participates in international co-operation and monitors international developments in supervisory practices.