Andorra: Financial Entities Must Comply with Anti-Money Laundering and Combating Financing of Terrorism Regulations
Financial entities operating in Andorra must adhere to anti-money laundering (AML) and combating financing of terrorism (CFT) regulations. This requires ensuring that all transactions are transparent, traceable, and preventing the use of services for illegal activities.
Alternative Structures
In Andorra, trusts and agent structures are not recognized under local laws, prohibiting their creation and use. Instead, financial entities may designate a local representative in Andorra with powers of attorney to carry out securities-related actions. Recourse to parallel debt provisions and parallel debt security packages is also recognized under Andorran law.
Loan Transfer Mechanisms
Andorran laws provide for three main loan transfer mechanisms:
- Assignment: The transfer of loans from one party to another without requiring specific formalities or requirements.
- Sale: The transfer of a full contractual position, including rights and obligations.
- Novation: The termination of an existing contract and the creation of a new one.
Debt Buy-Back
Debt buy-back transactions are not common in Andorra and are subject to certain conditions under local law. Such transactions must be carried out in a manner that does not qualify as a financial activity.
Public Acquisition Finance
Andorran laws do not provide specific rules or principles for “certain funds” provisions for mergers and acquisitions or takeover transactions. However, parties may contractually agree to establish such provisions to demonstrate certainty of funding and full and unconditional funding disposal at the time of transaction completion.
Recent Developments
The Andorran banking sector has been investing in digital transformation projects, with key legislative measures approved in recent years to promote technological innovation and financial activities. These developments include:
- The Digital Assets Act
- The Digital Economy Act
Usury Laws
Andorra does not have specific laws or regulations limiting the amount of interest that can be charged. However, the Andorran Superior Court has recognized usury in several resolutions based on the interest regulated by the Andorran Banking Association.
In conclusion, financial entities operating in Andorra must comply with AML/CFT regulations and take steps to prevent the use of their services for illegal activities. The country’s laws provide various loan transfer mechanisms, but debt buy-back transactions are subject to specific conditions. While there is no legislation limiting interest rates, the Andorran Superior Court has recognized usury in certain cases.