Financial Crime World

Compliance and Regulations for Financial Institutions in Andorra

In recent years, the global financial system has become increasingly focused on compliance and anti-money laundering (AML) measures. Andorra, a small principality located in the Pyrenees mountains between France and Spain, has also taken significant steps to strengthen its AML framework. This article will explore the compliance and AML measures in Andorra, highlighting the country’s efforts to combat money laundering and the financing of terrorism.

Andorra has implemented a comprehensive legal framework to combat money laundering and terrorist financing. The main legislation governing AML in the country is the Law on the Prevention and Fight against Money Laundering and the Financing of Terrorism, enacted in 2010. This law establishes the obligations of financial institutions, designated non-financial businesses and professions (DNFBPs), and other entities to prevent and detect money laundering activities.

Financial Institutions

Financial institutions in Andorra, including banks, insurance companies, and investment firms, are subject to strict AML regulations. They are required to:

  • Implement robust customer due diligence procedures
    • Identify and verify customers’ identities
    • Monitor transactions
    • Report suspicious activities to the Financial Intelligence Unit (FIU)
  • Maintain adequate records of their customers and transactions

DNFBPs

DNFBPs, such as lawyers, accountants, real estate agents, and casinos, are also subject to AML obligations. They are required to:

  • Conduct customer due diligence measures
    • Identify beneficial owners
    • Implement internal controls
    • Report suspicious transactions to the FIU

Customer Due Diligence

Customer due diligence is a fundamental component of AML measures in Andorra. Financial institutions and DNFBPs are required to conduct thorough due diligence on their customers to ensure they are not involved in money laundering or terrorist financing activities.

  • Identify and verify customers’ identities
  • Assess their risk profiles
  • Monitor transactions

Record Keeping and Reporting

Financial institutions and DNFBPs are also required to:

  • Maintain adequate records of their customers and transactions
    • Information on the identity of the customers
    • Nature of the business relationship
    • Source of funds
  • Report suspicious transactions to the FIU

Financial Intelligence Unit (FIU)

The FIU plays a crucial role in Andorra’s AML framework. It is responsible for:

  • Receiving, analyzing, and disseminating information on suspicious transactions to relevant law enforcement and supervisory authorities
  • Collaborating with international counterparts
  • Participating in global initiatives to combat money laundering and terrorist financing

International Cooperation

Andorra recognizes the importance of international cooperation in the fight against money laundering and terrorist financing. The country has actively engaged in international initiatives and implemented international standards to strengthen its AML framework.

  • Member of the Financial Action Task Force (FATF)
  • Participates in global initiatives to combat money laundering and terrorist financing

Conclusion

Andorra has made significant progress in enhancing its compliance and anti-money laundering measures. The country’s AML legislation, robust customer due diligence requirements, and the role of the FIU demonstrate its commitment to combating money laundering and the financing of terrorism. By actively participating in international initiatives and cooperating with other countries, Andorra contributes to the global efforts to maintain the integrity of the financial system and protect against illicit activities.