Iceland: Removal of capital controls on holders of offshore Króna and reduction of special reserve requirement on capital inflows
Clearstream Banking1 informs customers, following Announcement A19007, that Act no. 14/2019, which amends the Foreign Exchange Act, no. 87/1992, and the Act on the Treatment of Króna-Denominated Assets Subject to Special Restrictions, no. 37/2016, was passed and entered into force on 5 March 2019.
Amongst other, following amendments are foreseen by the Act no. 14/2019:
- It is permissible to withdraw offshore Króna assets held as deposits in accounts subject to special restrictions or to redeem Central Bank certificates of deposit in order to purchase foreign currency from a financial undertaking in Iceland or an international securities depository, for deposit to an account with a foreign financial undertaking located abroad.
- It is permissible to withdraw offshore Króna assets from account subject to special restrictions or to lift encumbrances pursuant to Articles 5 and 6 from offshore króna assets, provided that they have been continuously owned [by the beneficial owner] since 28 November 2008.
- An individual who is the registered owner of offshore Króna assets is permitted to withdraw from an account subject to special restrictions or to redeem Central Bank certificates of deposit for a maximum of ISK 100mn, provided that the individual is the beneficial owner of the funds in question.
- The special reserve ratio applied to the special reserve base shall determine the special reserve amount. The special reserve amount remains unchanged throughout the original holding period. The obligation to hold funds in reserve shall be satisfied:
Details of the announcement are available on the website of the Central Bank of Iceland.
Additionally, the Central Bank of Iceland has announced on 4 March 2019 that, conditions have now developed that permit lowering the Special Reserve Requirement (SRR) to 0%.
Clearstream Banking is currently validating the impacts of the above with the Central Bank of Iceland, as well as to prepare the operational processes that are required to support the above changes and adjust the service offering in accordance.
Detailed guidance will be further provided as it becomes available.
Further information can be obtained from Már Guðmundsson, Governor of the Central Bank of Iceland, on: +354 569-9600, or can be found on the Central Bank of Iceland website.
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 Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.