Financial Crime World

EU Establishes Robust Regulatory Framework to Protect Andorran Financial System

The European Union has established a comprehensive regulatory framework aimed at ensuring the robustness and capital adequacy of Andorra’s financial system, providing unprecedented protections for depositors and investors.

Key Components of the Regime

  • Law 27/1997: Sets out disciplinary measures applicable to entities operating in the Andorran financial system, maintaining stability and solvency.
  • Law 35/2018: Introduces stringent capital adequacy and solvency requirements for banking entities and investment firms, ensuring sufficient resources to withstand potential shocks.
  • Decree 22/2016: Requires entities to prepare annual accounts in accordance with international financial reporting standards adopted by the EU, enhancing transparency and accountability.

Insurance Sector

  • Insurance Law (12/2017): Establishes a modern, comprehensive regulatory framework for the Andorran insurance and reinsurance market, aligning with European Union regulations.
  • The Andorran Financial Authority (AFA) assumes responsibility for supervising the insurance and reinsurance market, as well as the banking and financial investment sectors.

Anti-Money Laundering and Combating Terrorist Financing

  • Law 14/2017: Introduces robust measures to prevent money laundering and terrorist financing, requiring entities to implement effective anti-money laundering controls.
  • Andorra has implemented the Fourth Money Laundering Directive provisions and the recommendations of the Financial Action Task Force (FATF) to ensure its legal framework aligns with international standards.

Digital Economy

  • Law 20/2014: Regulates electronic contracting and operators in the digital space, establishing obligations for operators and liability regimes.
  • The aim is to provide a basic legal framework for economic activities in the digital space, ensuring fair competition and protecting consumers.

Competition and Consumer Protection

  • Law 13/2013: Aims to improve conditions for consumer protection and market efficiency by regulating antitrust, unfair competition, and consumer protection.

Insolvency Provisions

  • Decree 4/1969: Regulates the premises for declaring insolvency, including arrangements with creditors or liquidation of the company.
  • Ensures that companies facing financial difficulties can restructure their debts or dissolve in an orderly manner.

Criminal Code

  • Law 9/2005: Includes the violation of professional secrecy as a criminal offence, punishable by imprisonment ranging from three months to three years.
  • Helps maintain trust and confidence in the financial sector by ensuring that professionals are held accountable for maintaining confidentiality.

Andorra’s commitment to implementing EU regulations demonstrates its dedication to safeguarding the stability and integrity of its financial system. The country’s robust regulatory framework provides a secure environment for depositors, investors, and companies operating in Andorra, reinforcing its position as a trusted financial hub in the region.