Financial Crime World

Andorra’s Anti-Money Laundering Progress: Third Enhanced Follow-up Report Reveals Partial Compliance

In a recent evaluation by the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), Andorra showed partial progress in addressing technical compliance deficiencies identified in previous reports. This article provides an overview of Andorra’s achievements and ongoing challenges in adhering to international anti-money laundering (AML) and counter-terrorist financing (CTF) standards.

Background

Andorra has been under enhanced follow-up since 2018 due to inadequacies identified in its fifth-round mutual evaluation report (MER) of September 2017. The country has submitted two Enhanced Follow-up Reports (EFRs) aimed at assessing Andorra’s progress in addressing the technical compliance deficiencies and implementing new measures in line with the Financial Action Task Force (FATF) Recommendations.

Advancements in Addressing Risk Areas

Non-Profit Sector

Of particular importance is the advancement in addressing the risks posed by the non-profit sector. Andorra conducts a thorough sectorial risk assessment of the non-profit sector in 2020 and identified 26 entities as likely to be at a high risk of terrorist financing. This assessment improved the analytical value of the risk assessment and addressed the majority of the identified weaknesses.

Partially Implemented New FATF Requirements

Andorra showed partial progress in implementing new requirements introduced by the FATF since the adoption of the 2nd Enhanced Follow-up Report in 2019. One significant change is the revision of the FATF Recommendation 15, which now includes new requirements for “virtual assets” and “virtual asset service providers.” Andorra is currently taking steps toward regulating and supervising these entities, although the legislative acts have not been adopted yet.

Areas of Concern in the Third EFR

Lack of Progress in Certain Areas

The report raises concerns about the lack of progress in certain areas such as:

  1. The development of best practices with the non-profit sector to address terrorism financing risks.
  2. The need to address the lack of specific outreach to the donor community.

Andorra is encouraged to continue its efforts to fully address these deficiencies.

Conclusion

In conclusion, Andorra’s third enhanced follow-up report reveals that the country has made partial progress in addressing the technical compliance deficiencies identified in previous reports. However, Andorra is expected to demonstrate further progress in full addressing the remaining challenges to strengthen its AML/CTF framework and ensure full compliance with FATF Recommendations. Andorra will report back to MONEYVAL in one year.