Iceland: Capital control liberalisation – Impacts update Part 1: Cash and Certificates of Deposit issued by the Central Bank of Iceland


Following our announcement A16156 published 24 October 2016, and announcement A17080, dated 24 May 2017, Clearstream Banking1 would like to update its customers on the impacts of the latest progress in the Icelandic market towards the lifting of the capital control restrictions that applies to offshore Króna cash assets.

The changes described below are effective immediately.


On 21 May 2016, the Icelandic Parliament passed a bill of legislation into law, the Act on the Treatment of Króna-Denominated Assets Subject to Special Restrictions, no. 37/2016, "The Act", which addressed the treatment of Króna-denominated assets subject to special restrictions. Since then several amendments have taken place supporting and pursuing the market progress towards the Capital Control Liberalization.

The most recent progress was achieved with the New Rules on Foreign Exchange that were published by the Central Bank of Iceland (CBI) on 12 March 2017 as well as with CBI last purchase offer for offshore Króna assets against EUR at 137.5 ISK/EUR. Concurrently, the new issuance of onshore securities, that is not subject to special restrictions as per The ACt, has started again.

Consequently, Clearstream Banking has decided to adjust its service offer accordingly.

Impact on customers

Clearstream Banking reactivates the processing of onshore ISK cash activities on which no capital control restriction applies

In order to enable the segregation of the onshore and offshore ISK cash activity, and support underlying exceptions foreseen by the CBI, specific processes apply for onshore ISK cash and offshore ISK cash activities respectively.

At the same time, Clearstream Banking will no longer support ISK offshore cash transfer for conversion into CBI2016 purposes (also referred as Certificates of Deposit CDs and being issued under ISIN  IS0000027068). As a result, transfers of ISK offshore cash deposits are no longer accepted by Clearstream Banking.

During the past months and the multiple auctions and purchase offers that the CBI has held to invite ISK offshore owners to progressively exit from their investments, Clearstream Banking has been actively assisting its customers wishing to centralise their ISK offshore cash within their Clearstream Banking account and to convert it into CBI2016 for further participation into CBI’s purchase offers. This has provided all of Clearstream Banking’s customers the opportunity to clear their ISK offshore cash positions. In line with the Icelandic market’s new dynamic, Clearstream is now focusing on the upcoming onshore ISK activities.

Finally, the withdrawal of offshore ISK cash, as authorised and within the limits set forth by the Art 12 of The Act is allowed.

ISK onshore cash services

Cash transfer

Clearstream Banking’s service offer on onshore Króna assets are re-activated and activity restrictions in place since May 2016 therefore no longer apply. Access to customers ISK cash accounts are now re-activated and limited to onshore ISK deposits only. Customers of Clearstream Banking can refer to the Creation Link Guide of Iceland for the detailed cash process.

Income proceeds

Clearstream Banking rehabilitates the standard income proceeds processes as described in the Customer Handbook and as applicable before the applications of restriction of last May 2016: Income proceeds due on onshore ISK denominated securities will be processed automatically  and the funds will be distributed to customer accounts, after deduction of applicable withholding taxes, and upon receipt of  funds by Clearstream Banking’s Cash Correspondent, with same value as received by Clearstream Banking..

Subsequent ISK cash balances are available to customers on their cash account and are not subject to any capital control restrictions.

ISK offshore cash services

Offshore ISK is ISK that falls under The Act, for example:  

  • Sale of restricted securities (Act 37 2016) results in restricted ISK;
  • CBI2016 (ISIN IS0000027068), is classified as offshore ISK;
  • Funds transferred from restricted ISK accounts are offshore ISK (the restricted accounts can be identified by the digits 21 in the 7th and 8th place of the IBAN).

As a general rule and unless explicitly authorised by CBI, Offshore ISK cash deposits must be kept in a ”restricted” cash account at the Central Bank of Iceland.

Customers of Clearstream Banking are not allowed to hold offshore ISK cash deposits in their cash account with us.

Cash transfer

On 13 June 2016, all offshore ISK cash balances were converted into CBI2016, which CBI has issued for segregation of offshore Króna assets purposes. Since then offshore ISK cash holdings are no longer accepted in Clearstream Banking.

Likewise, offshore ISK cash delivery and receipt as well as settlement against payment in ISK are not allowed.

Cash transfers via CBI2016

Cash transfer via CBI2016 is not supported.

Cash Income proceeds

Receipt of offshore ISK cash from income proceeds due on offshore Króna securities will be systematically converted into CBI2016 at conversion rate provided by CBI, and the result of the conversion will be credited to entitled customers instead of cash, within best possible timeframe.

There is no exhaustive list of the offshore ISK-denominated securities available in the market. In order to identify the offshore Króna assets, reference is made to the definition provided by The Act.

Certificate of deposit (CBI2016)

Securities transfer

Transfer of offshore Króna securities between restricted accounts is allowed if there is no change of ultimate beneficial owner. Customers of Clearstream Banking wishing to instruct such transfers must send a free of payment instruction via MT540/542, Xact Web Portal or CreationOnline equivalent before 15:00 CET with either of the following narratives: 

  • ART 11.1, IBAN ISxxxxxx21xxxxxxxxxxxxxxxx (if CBI2016 are meant to be transferred onto ISK restricted cash account);
  • Receiving restricted securities account (if a transfer between securities accounts);
  • CBI2016 TRANSFER (if a transfer between securities accounts). 

Cash withdrawal via transfer of CBI2016

Art. 12 of the The Act on the Treatment of Króna-Denominated Assets Subject to Special Restrictions foresees that individual beneficial owner of offshore Króna assets according to Article 2, Item 1(a) of the Act is authorised to withdraw funds from accounts subject to special restrictions if the funds involved have been continuously owned by the beneficial owner since 28 November 2008. Such withdrawal is subject to combined limitation of 100,000,000 ISK per calendar year, and to prior authorization from the Central Bank of Iceland.

Clearstream Banking customers wishing to instruct withdrawal of funds within the above conditions foreseen by the Act must instruct Clearstream Banking with a free of payment delivery via MT542 or Xact Web Portal or CreationOnline equivalent and a pre-advice of ISK equivalent on its cash account. All following additional details must be included into the free of payment delivery:

  • Narrative text: “Art 12” + the confirmation code from CBI.

For example: Art 12 1610259

Status summary of cash activity

Onshore ISK cash

Security and instruction type


1. Delivery of ISK out of CBL


2. Receipt of ISK in CBL


3. Transfer of ISK within CBL


Offshore ISK cash including CBI2016

Security and instruction type


Process outcome and notes

1. Delivery of ISK out of CBL

Not allowed

Exception exists a

2. Receipt of ISK in CBL excl. income proceeds

Not allowed


2bis. Receipt of ISK income proceeds

Allowed via CBI2016

Systematic conversion into CBI2016
Credit of CBI2016 on a best effort basis

3. Transfer of ISK within CBL

Not allowed





a Exception authorised by CBI


Requested format

1a. Cash withdrawal via cash wire out as per Art 12 of The Act


Standard MT542 or Xact/COL equivalent
Narrative: ART 12 +  confirmation code from CBI; for example 'ART 12 1610259'
14:00 CET


Customers of Clearstream Banking hereby acknowledge and agrees to indemnify and hold harmless Clearstream Banking from any and all expenses (including attorney fees) costs, penalties, losses, damages, judgments, suits or any other liabilities whatsoever incurred due to the fact that the customer has transferred ISK cash in contradiction of the above service description, or of the segregation rules set forth in The Act.

Further information

For further information, please contact the Clearstream Banking Client Services or your Relationship Officer.

1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for CBF customers using CreationOnline), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.

2. Please refer to the “Compliance and Disclosure duty” section.