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Andorran Banking Sector Adheres to International Standards

The Andorran banking sector has committed to following international standards on remuneration policies, anti-money laundering and terrorism financing (AML/CFT), depositor protection, bank secrecy, and prudential regulations.

Remuneration Policy

In accordance with Law 8/2013, the variable component of an individual’s remuneration must not exceed 200% of their fixed component. This applies to:

  • Senior management
  • Employees who take risks
  • Those exercising internal control functions
  • Any employee receiving a lump-sum payment equivalent to that of senior management

AML/CFT Requirements

Andorra has implemented the Fourth Anti-Money Laundering Directive and the Financial Action Task Force (FATF) recommendations to prevent money laundering and terrorism financing. Banking entities must comply with several obligations, including:

  • Identifying clients and transactions
  • Reporting suspicious transactions to the UIFAND
  • Keeping confidential information about suspicious reporting
  • Applying simplified and enhanced due diligence measures based on client risk profiles
  • Adopting procedures for detecting unusual or suspicious transactions

Depositor Protection

The Andorran deposit guarantee system is regulated by Law 8/2014, which ensures that deposits up to EUR100,000 are repaid in the event of an insolvent banking entity. Additional coverages include:

  • Deposits from real estate transactions
  • Payments linked to life events

Bank Secrecy

Andorra has abolished bank secrecy, replacing it with international requirements on exchange of information for tax purposes recommended by the Organisation for Economic Co-operation and Development (OECD). Three types of exchange are regulated:

  • Exchange of information on request
  • Automatic exchange
  • Spontaneous exchange

Prudential Regime

Law 35/2018 aligns Andorra’s prudential regulations with EU Directives and Regulations. Banking entities must maintain minimum internal capital adequate for their risks, develop strategies for assessing and maintaining capital adequacy, and comply with minimum capital requirements.

These measures demonstrate Andorra’s commitment to international standards and its efforts to ensure a stable and secure financial system for its citizens.