Andorra’s Banking System Under Scrutiny Amid Money Laundering Allegations
The banking sector in Andorra is facing a major scandal after allegations emerged that one of its leading lenders pushed hundreds of millions of dollars through four US banks on behalf of clients involved in organized crime, corruption and human trafficking.
Downgrade in Credit Rating
The controversy has led to a downgrade of Andorra’s credit rating by ratings agency Standard & Poor’s. This move reflects the growing concerns about the country’s banking system and its ability to prevent money laundering.
Key Players Involved
- Banco Privado d’Andorra (BPA): The bank at the center of the scandal, with three top managers arrested, including CEO Joan Pau Miquel Prats.
- US Treasury’s Financial Crimes Enforcement Network: Launching an investigation into BPA’s alleged money laundering activities.
Allegations Against Banco Privado d’Andorra
According to the US Treasury, BPA’s customers included third-party money launderers working on behalf of Russian and Chinese organized crime groups, as well as a network siphoning funds from a Venezuelan state oil company.
Specific Cases
- Andrey Petrov: Arrested in Spain two years ago for allegedly helping to launder €56 million for Russian organized criminals. He is suspected to be linked to Semion Mogilevich, one of the FBI’s most wanted fugitives.
- Venezuelan money-laundering network: Involving hundreds of shell companies connected to powerful government officials, which are suspected of making fake contracts with Venezuelan public institutions.
Impact on Spanish Banking
The scandal has spilled over into Spain, where Banco de Madrid, the Spanish arm of BPA, ceased operations yesterday after customer withdrawals led to its bankruptcy filing. Spanish authorities have raised concerns about whether Banco de Madrid was also involved in money laundering and have seen the resignation of its entire seven-member board of directors.
Government Response
The government has promised to take steps to address the allegations and restore confidence in the banking sector. However, the crisis has raised questions about the banking system’s ability to prevent money laundering in Andorra, a country known for its financial secrecy laws.