Financial Crime World

Andorra’s Compliance with FATF Recommendations: A Mixed Bag

Andorra’s latest mutual evaluation with the Financial Action Task Force (FATF) has revealed a mixed picture of its compliance with anti-money laundering and combating terrorist financing regulations.

Compliance Status

The report shows that Andorra is largely compliant with 11 out of the 40 FATF recommendations, partially compliant with 18, and non-compliant with 11. The assessment highlights several areas where the country needs to improve its implementation of FATF standards.

Areas for Improvement

  • Risk Assessment and Application of a Risk-Based Approach: Andorra’s financial institutions are not adequately assessing risks related to money laundering and terrorist financing.
  • National Cooperation and Coordination: The country’s authorities need to improve their communication and collaboration with each other and with international partners.

Positive Developments

  • Prevention of Terrorist Financing: Andorra has made significant progress in implementing measures to prevent terrorist financing. Its financial institutions are now required to apply enhanced due diligence measures for customers from higher-risk countries.
  • Laws and Regulations: Andorra’s laws and regulations related to money laundering and terrorist financing are compliant or largely compliant.

Outstanding Challenges

  • Customer Due Diligence: Andorra still faces challenges in ensuring that its financial institutions perform adequate customer due diligence.
  • Record-Keeping: The country needs to improve its record-keeping practices, including the maintenance of accurate records of transactions.
  • Reporting of Suspicious Transactions: Andorra must strengthen its reporting of suspicious transactions and ensure that its financial institutions are adequately trained to identify and report such transactions.
  • Transparency and Beneficial Ownership Rules: The country’s transparency and beneficial ownership rules for legal persons and arrangements need improvement.

Next Steps

The FATF report provides a roadmap for Andorra to address these shortcomings and bring its anti-money laundering and combating terrorist financing regulations in line with international standards. The country’s authorities must now take concrete steps to implement the necessary reforms and ensure that its financial system is safe from illicit activities.