Andorra Fails to Meet International Standards on Risk Assessments

A recent report by MONEYVAL, the Council of Europe’s anti-money laundering and counter-terrorism financing body, has criticized Andorra for failing to meet international standards on risk assessments.

Failure to Implement Risk Assessments

According to the report, Andorra has not implemented a requirement for companies to conduct risk assessments prior to launching new products or services. This lack of oversight puts the country at risk of being used as a hub for money laundering and terrorist financing activities.

• The report highlights that Andorra’s failure to implement risk assessments allows companies to operate without proper scrutiny, increasing the likelihood of financial crimes.
• The absence of risk assessments also hinders the country’s ability to identify and mitigate potential threats to its financial system and national security.

Inadequate Regulation of Virtual Asset Service Providers

The report also noted that Andorra has made little progress in regulating virtual asset service providers (VASPs), despite the introduction of new international standards by the Financial Action Task Force (FATF) in 2018. The country has initiated amendments to its anti-money laundering laws, but these changes have yet to be adopted.

• VASPs are a high-risk sector that requires strict regulation to prevent money laundering and terrorist financing.
• Andorra’s failure to regulate VASPs increases the risk of financial crimes and undermines the country’s efforts to combat terrorism financing.

Consequences and Recommendations

As a result, MONEYVAL has downgraded Andorra’s technical compliance rating from “C” to “PC”, indicating partial compliance with international standards. The country is expected to continue reporting back on its progress in strengthening its implementation of anti-money laundering and counter-terrorism financing measures.

• MONEYVAL urges Andorra to take immediate action to address the deficiencies highlighted in the report, including implementing risk assessments and regulating VASPs.
• Failure to comply with international standards may have serious consequences for Andorra’s financial system and national security.