Financial Crime World

Andorra Takes Steps Forward in Combating Financial Crime and Money Laundering: A Closer Look at the Principality’s New Regulations

Andorra, the tax haven situated between France and Spain, has recently reinforced its commitment to combating financial crime and money laundering. The following article provides a closer look at Andorra’s new regulations.

New AML Measures in Andorra

In early 2021, the Andorran government announced the implementation of new Anti-Money Laundering (AML) measures. These regulations are to be enforced by the Financial Intelligence Unit (FIU), the National Council, and financial institutions in the principality. The measures include:

  1. Increasing Regulatory Oversight: Enhanced supervision to ensure effective AML compliance in financial institutions and designated non-financial businesses and professions (DNFBPs).
  2. Enhancing Customer Due Diligence: Stricter KYC procedures, including risk-based customer profiling, identity verification, and ongoing monitoring.
  3. Bolstering International Cooperation: Improved collaboration with other financial intelligence units and international organizations.

Comprehensive AML Legislation

Andorra’s AML legislation, first introduced in 1995 and last updated in 2021, lays out a detailed framework for combating financial crimes in the jurisdiction. Financial institutions and DNFBPs in Andorra must:

  • Establish risk-based AML programs
  • Perform customer due diligence procedures
  • Maintain records and reports for five years

The Role of the FIU

The FIU, established in 1998, plays a crucial role in combating financial crime in the principality. Its responsibilities include:

  1. Receiving and analyzing Suspicious Transaction Reports (STRs)
  2. Collaborating with other financial intelligence units and international organizations

International Cooperation

As a member of the Financial Action Task Force (FATF), the Organization for Economic Cooperation and Development (OECD), and the European Banking Authority (EBA), Andorra is subject to regular evaluations by these international organizations. The principalities’ efforts to enforce stringent international standards and guidelines provide a positive outlook for its financial sector.

Customer Onboarding and Ongoing Monitoring

Under the new regulations, customers can expect a rigorous onboarding process with their financial institutions. This process includes:

  1. AML checks
  2. Identity verification
  3. Risk assessments

Regularly updated customer due diligence is essential to ensure continued compliance with AML regulations. Any suspicious transactions or activities must be reported to the FIU, and failure to do so may result in significant fines and penalties.

Positive Outlook for Andorra’s Financial Sector

By strengthening its AML measures and enhancing international cooperation, Andorra has taken significant steps forward in addressing financial crimes within its borders. As the international community continues to emphasize transparency, the principalities’ efforts to comply with international regulations and maintain a robust AML framework bode well for its financial sector.