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Andorra’s Financial Regulatory Framework

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Andorra has implemented a comprehensive financial regulatory framework to prevent money laundering (AML) and combating financing of terrorism (CFT), protect depositors, maintain bank secrecy, and ensure a prudential regime. Here are some key points summarized:

AML/CFT Requirements

• Andorra has implemented the Fourth Anti-Money Laundering Directive and adheres to FATF recommendations.
• Banking entities must conduct due diligence on clients and transactions, report suspicious activities, maintain client admission policies, and keep documentation for ten years.
• AML/CFT training programs are mandatory, and external audits verify compliance.

Depositor Protection

• The FAGADI Law aligns with the European Parliament’s Directive 2014/49/EU on deposit guarantee schemes.
• Deposits are guaranteed up to EUR100,000, with additional coverages for specific types of deposits (e.g., real estate transactions, marriage/divorce payments).
• The FAGADI receives contributions from member entities to fund the guarantee scheme.

Bank Secrecy

• Andorran law no longer applies bank secrecy due to international requirements on tax information exchange recommended by the OECD.
• Three types of exchanges are regulated: on request, automatic, and spontaneous.

Prudential Regime

• Law 35/2018 aligns with EU directives on prudential supervision of credit institutions and investment firms.
• Banking entities must maintain adequate internal capital to cover risks and develop strategies for assessing capital adequacy.
• Minimum capital requirements are subdivided into Common Equity Tier 1, Additional Tier 1, and Tier 2 capital.