Financial Crime World

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Andorra’s Efforts in Combating Terrorism and Financing

Andorra has taken significant steps to strengthen its legal framework and implement effective measures to prevent and detect terrorism financing (TF). However, the country still faces challenges in ensuring that its regulatory regime is fully adapted to address the specificities of its customers and activities.

Progress Made

According to a recent report by the National Authority for Combating Money Laundering (NRA), Andorra has made progress in strengthening its anti-money laundering (AML) and combating financing of terrorism (CFT) policies and procedures. The country has also demonstrated a strong commitment to applying AML/CFT obligations, with many financial institutions and designated non-financial businesses and professions (DNFBPs) having measures in place to prevent TF.

Challenges Identified

However, the NRA report highlights several areas that require improvement. For instance:

  • Financial institutions have expanded into foreign markets, but may not fully understand the risks inherent in such “internationalisation” and have not developed comprehensive group-wide programs against ML/TF risk.
  • Technical deficiencies exist in the licensing and registration controls to prevent criminals and their associates from holding positions of control or management in financial institutions and DNFBPs.
  • The National Financial Intelligence Unit (UIFAND) does not fully apply risk-based supervision to financial institutions and DNFBPs, focusing mainly on checking whether policies and procedures are in place and CDD is applied.

Recommendations

The NRA report provides several recommendations to address the identified challenges:

  • Improve the licensing and registration controls to prevent criminals and their associates from holding positions of control or management in financial institutions and DNFBPs.
  • Develop comprehensive group-wide programs against ML/TF risk for financial institutions that have expanded into foreign markets.
  • Enhance the UIFAND’s supervisory engagement with the DNFBP sector, including the ongoing collection of data for off-site analysis.
  • Improve strategic engagement and coordination of activities between the supervisory authorities to leverage off the overlap between prudential and AML/CFT supervision.

Conclusion

By implementing these recommendations, Andorra can further strengthen its efforts in combating TF and ensure that it remains a secure and stable financial center. The country’s commitment to addressing these challenges is crucial in ensuring that it continues to be a trusted and reliable partner for international investors and partners.