Financial Crime World

Andorran Banking Sector Adheres to International Standards

The Andorran banking sector has committed to complying with international standards on remuneration policies, anti-money laundering and terrorism financing, depositor protection, bank secrecy, and prudential requirements.

Remuneration Policies

According to Law 8/2013, the variable component of remuneration does not exceed 200% of the fixed component for each individual. The law also establishes that Andorran banking entities must follow inspiring principles when implementing remuneration policies, including:

  • Salaries
  • Discretionary retirement benefits for senior management
  • Risk-takers
  • Internal control staff
  • Employees who receive lump-sum payments

Anti-Money Laundering and Terrorism Financing

Andorra is fully committed to implementing the Fourth Anti-Money Laundering Directive and the FATF’s recommendations. Banking entities are required to comply with AML/CFT obligations, including:

  • Identifying clients and transactions
  • Reporting suspicious activities
  • Conducting regular training programs for employees

Depositor Protection

The country has implemented a depositor protection regime in line with EU Directive 2014/49/EU. The regime guarantees deposits up to EUR100,000, with additional coverages available in exceptional cases.

Bank Secrecy

Andorran banking entities are also subject to bank secrecy requirements, which are regulated by the Andorran Criminal Law. However, due to international agreements on tax information exchange, bank secrecy is no longer applicable in certain cases.

Prudential Requirements

The country has implemented a prudential regime that aligns with EU regulations. Banking entities are required to:

  • Maintain minimum internal capital
  • Develop strategies for assessing and maintaining its adequacy
  • Subdivide the amount of capital maintained into:
    • Common Equity Tier 1
    • Additional Tier 1
    • Tier 2 capital

Oversight and Sanctions

The Andorran Financial Authority (AFA) oversees the implementation of these regulations and ensures that banking entities comply with international standards. Violations of these provisions may be sanctioned according to the Disciplinary Law.

Conclusion

Andorra’s commitment to implementing international standards demonstrates its dedication to maintaining a stable and secure financial system, protecting depositors’ interests, and preventing money laundering and terrorism financing.