Legislative Framework for Financial Services in Andorra
Andorra has implemented various laws and regulations to align its financial system with international standards. The country’s legislative framework is designed to promote a stable and secure financial environment, ensuring the protection of investors and the integrity of the financial system.
Key Aspects of Legislation
- MiFID II: Andorra has incorporated MiFID II into its legal framework, which regulates the organizational requirements and operating conditions for entities within the financial system.
- Supervision: The Andorran National Institute of Finance (AFA) is responsible for supervising the financial sector, including banking, insurance, and reinsurance companies. The AFA also has international cooperation agreements with other countries to ensure effective supervision.
Ensuring Financial System Stability
The country has implemented laws and regulations to ensure the stability and solvency of the financial system, including:
- Guarantee Deposit Fund: This fund provides a safety net for depositors in case of bank failures.
- Investment Guarantee System: This system protects investors by ensuring that their investments are secure and stable.
Prudential Supervision
Andorra has implemented prudential supervision requirements for banking entities and investment firms, including:
- Capital Adequacy Ratios: Banks must maintain a minimum level of capital to ensure they can withstand financial shocks.
- Liquidity Ratios: Banks must maintain a minimum level of liquidity to ensure they can meet their short-term obligations.
Anti-Money Laundering/Terrorist Financing Provisions
The country has implemented laws and regulations to prevent money laundering and terrorist financing, including:
- Customer Identification Procedures: Financial institutions must verify the identity of their customers.
- Suspicious Transaction Reporting: Financial institutions must report suspicious transactions to the relevant authorities.