Financial Crime World

Andorra Takes Steps to Rectify Financial Services Deficiencies

The Andorran government has taken significant steps to address the deficiencies identified in its financial services regime, according to a recent report from the International Monetary Fund (IMF).

Addressing Deficiencies

The report highlights several areas where Andorra has made improvements. Under Article 15 of the Law Regulating the Financial System’s Disciplinary Regime, providing financial services without the corresponding administrative authorization and registration constitutes a very serious infringement. In response to this requirement, Andorra has re-rated C.26.1 as “met.”

  • Minor deficiencies were identified in C.26.2, including the lack of licensing or authorization for two foreign post offices offering postal account services.
    • To address this issue, Andorra granted these post offices the right to provide payment services, subject to registration under Article 4(1)(f) and 7(c) of Law 8/2018.

Effective Management of Banks

Andorra has implemented measures to ensure effective management of banks by requiring directors and managers to be resident in the country. This move aims to address concerns related to “physical presence” as defined by the Financial Action Task Force (FATF).

Fit and Proper Criteria for Shareholders and Directors

Regarding C.26.3, which deals with fit and proper criteria for shareholders and directors, Andorra has taken steps to remedy deficiencies identified in its regulations. The report notes that the Andorran authorities have implemented measures to prevent individuals with criminal records from holding significant interests or management positions in financial institutions.

Progress on Consolidated Group Supervision

The report highlights progress made by Andorra in addressing concerns related to consolidated group supervision, including the establishment of a joint supervisory body between the Financial and Insurance Authority (INAF) and the Unit for Financial Information and Analysis (UIFAND).

Areas for Further Improvement

However, the report identifies several areas where further improvements are needed. These include:

  • The need for INAF to take more robust action to address changes in control without proper notification or approval.
  • The requirement for consolidated supervision of insurance companies by the Ministry of Finance.

Government Commitment

In its response to the IMF report, the Andorran government committed to continue strengthening its financial services regime and addressing outstanding issues. The government has also pledged to enhance transparency and cooperation with international organizations to combat money laundering and terrorist financing risks in the postal sector.

Conclusion

Overall, the IMF report acknowledges that Andorra has made significant progress in addressing deficiencies identified in its financial services regime, but notes that further work is needed to ensure full compliance with international standards and best practices.