Financial Crime World

Andorra Takes Steps to Strengthen Banking Sector

Andorra has introduced several measures aimed at protecting depositors and combating financial crimes in its banking sector.

Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) Regulations

According to Law 8/2013, banking entities are required to comply with AML/CFT regulations. This includes:

  • Reporting suspicious transactions to the UIFAND
  • Conducting due diligence on clients
  • Implementing training programs for employees

Deposit Protection Regime

Andorra has implemented a deposit protection regime, regulated by the FAGADI Law, which provides up to EUR100,000 in coverage for deposits in the event of bank insolvency. The regime also covers additional types of deposits, such as:

  • Those related to real estate transactions
  • Insurance benefits

Abolition of Bank Secrecy

Andorra has abolished bank secrecy, aligning with international requirements on exchange of information for tax purposes recommended by the OECD. This includes regulating three types of exchange:

  • Exchange of information on request
  • Automatic exchange of information
  • Spontaneous exchange of information

Prudential Regime

Law 35/2018 aligns Andorra’s prudential regime with EU directives, requiring banking entities to maintain minimum internal capital that is adequate in quantity, quality, and distribution. This includes:

  • Developing strategies and processes for assessing and maintaining the adequacy of their internal capital
  • Ensuring the stability and security of the financial system

Disciplinary Action for Non-Compliance

Law 8/2013 establishes that infringements of these provisions may be sanctioned according to the Disciplinary Law. This means that banking entities that fail to comply with AML/CFT regulations or other requirements may face disciplinary action, including:

  • Fines
  • Penalties

Conclusion

Andorra’s efforts to strengthen its banking sector are aimed at ensuring the stability and security of the financial system, while also promoting transparency and combating financial crimes. The measures are expected to have a positive impact on the country’s financial landscape and provide greater protection for depositors.