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United Kingdom: Icelandic Banks’; UK Firms' Assets Frozen in Response to Bank Collapse

(Oct. 17, 2008) The collapse of several of Iceland's banks has led to a highly charged diplomatic dispute and intensive negotiations between Icelandic and British authorities. A delegation of British Treasury officials was in Iceland over the weekend of October 10, 2008, to attempt to resolve the issue.

The failed Icelandic banks reportedly hold over £18 billion (approximately US$34 billion) in British accounts that range from company accounts to local authority government accounts to individual saving accounts. The diplomatic dispute began after Icelandic authorities reportedly would not guarantee the return of British money. The UK assets of one of the failed banks were seized under UK anti-terrorism legislation that was aimed at preventing extremist groups from laundering money. The Icelandic authorities claimed that this step was “not very pleasant” and the British Prime Minister Gordon Brown has asserted “[w]e are freezing the assets of Icelandic companies in the UK where we can” and in addition “[w]e will take further action against the Icelandic authorities wherever that is necessary to recover the money.” (James Kirkup, Christopher Hope, & Jon Swaine, Financial Crisis: Gordon Brown Demands £20 bn 'British Money' from Iceland, THE TELEGRAPH (London), Oct. 10, 2008, available at http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3169032/Financial-
Crisis-Gordon-Brown-demands-20-bn-British-money-from-Iceland.html
; UK to Demand Iceland Money Back, BBC NEWS, Oct. 10, 2008, available at http://news.bbc.co.uk/1/hi/uk_politics/7662599.stm.)