Andorra’s Banking System Tightens Due Diligence Measures
Andorra, once known for its secretive tax haven reputation, has undergone significant changes in recent years. The country has evolved into a more open and accepted financial system, complying with international regulatory requirements. As a result, Andorran banks are now strictly enforcing due diligence measures to ensure compliance.
Increased Scrutiny for New Accounts
Banks in Andorra have become increasingly cautious when it comes to opening new accounts, particularly for company accounts. To avoid any doubts or potential issues, banks are requiring proof of commitment to the country and its banking system. This means that account holders must demonstrate a genuine interest in doing business with the bank, rather than simply seeking to avoid taxes.
Key Requirements
- Proof of commitment to Andorra and its banking system
- Demonstrated genuine interest in doing business with the bank
- Avoidance of tax evasion or other illicit activities
Two-Pronged Approach
To mitigate risks and maintain security, it is recommended that residents consider opening two separate bank accounts in different banks. This not only provides an added layer of protection but also offers greater flexibility and choice when it comes to banking products and services.
Benefits of a Two-Pronged Approach
- Added layer of protection
- Greater flexibility and choice in banking products and services
GDP and Credit Rating
Despite the changes, Andorra’s GDP remains strong, with a credit rating of BBB+ from Fitch. The country’s banking system is considered secure, with solvency ratios well above globally recommended levels.
Economic Strengths
- Strong GDP
- High credit rating (BBB+ from Fitch)
- Secure and stable banking system
New Taxation and Fiscal Residency Tests
Banks in Andorra are now requiring proof not only of fiscal residency but also of tax payments in that country. For new residents seeking to become a fiscal resident in Andorra, this means providing documentation showing payment of taxes in their home country or explaining legitimate reasons for not yet being a fiscal resident.
Key Requirements
- Proof of fiscal residency
- Proof of tax payments in the home country
- Legitimate reasons for not being a fiscal resident
Existing Account Holders
It is likely that existing account holders will soon be required to comply with the same due diligence measures. Those who had accounts opened many years ago using only a passport and cash may need to re-evaluate their financial situation and consider getting their house in order.
Steps for Existing Account Holders
- Review financial situation
- Consider updating documentation
- Ensure compliance with new regulations
Conclusion
Andorra’s banking system has undergone significant changes, and banks are now strictly enforcing due diligence measures. To avoid any issues or complications, it is essential for individuals seeking to open a bank account or become a resident to be prepared and demonstrate commitment to the country and its banking system.