Financial Crime World

Title: Andorra’s Fight Against Money Laundering and Terrorist Financing: Progress and Challenges as Assessed by MONEYVAL

Subtitle: Highlights from the fifth round mutual evaluation report

Andorra, a European microstate situated between France and Spain, has faced scrutiny over the past decade due to concerns regarding its financial sector’s susceptibility to money laundering (ML) and terrorist financing (TF) activities. MONEYVAL, Europe’s anti-money laundering and counter-terrorist financing watchdog, has recently conducted an evaluation of Andorra’s Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) measures (as of March 2017).

Progress and Achievements

  • Legal and Regulatory Framework: Andorra has made considerable progress in establishing a legal and regulatory framework for AML/CFT, with key achievements including:
    • The enactment of laws on Terrorist Financing
    • The transposition of the Fourth EU AML Directive
    • The implementation of measures to prevent the abuse of legal persons and arrangements
  • Enhanced Capacities: Andorran authorities have strengthened their capacities to identify, investigate and prosecute ML and TF cases.

Areas for Improvement

  • Risk Assessment Methodology: Concerns over the application of risk assessment methodology in the supervision of complex and large legal entities.
  • Political Risk: Effectiveness of monitoring political risk in the context of the Principality’s specific situation needs improvement.
  • Customer Due Diligence (CDD): The report suggests that improvements in the CDD framework, particularly regarding beneficial ownership information, are required.

Recommendations

  • Risk Assessment Methodology: Andorra is encouraged to further enhance its risk assessment methodology and develop risk-related measures for complex legal entities.
  • CDD: Improvements to the CDD framework include the need to establish a central registrar of ultimate beneficial owners and the integration of CDD information into the financial intelligence unit database.

Conclusion

The Andorran authorities have expressed their commitment to addressing these recommendations and reaffirmed their dedication to fulfilling their international obligations. The international community, in turn, places increased pressure on countries like Andorra to adhere to global AML/CFT standards to ensure their financial sectors aren’t used for illicit activities.

Key Takeaways

  • MONEYVAL, the European anti-money laundering and counter-terrorist financing watchdog, conducted an evaluation of Andorra’s AML/CFT measures.
  • While significant progress has been made in the establishment of a legal and regulatory framework, challenges remain, particularly in the application of risk assessment methodology, effectiveness of CDD, and monitoring political risks.
  • The report provides recommendations for Andorra to address these challenges and strengthen its AML/CFT framework.