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Banking Regulations in Andorra: A Summary

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Andorra has implemented various regulations to ensure a stable and secure banking system. This article summarizes key aspects of Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), depositor protection, bank secrecy, and prudential requirements.

Anti-Money Laundering (AML) / Combating the Financing of Terrorism (CFT)

Andorra is committed to international AML/CFT standards. Banking entities must comply with regulations, including:

Identifying clients and beneficial owners
Reporting suspicious transactions to UIFAND
Keeping client information confidential
Applying due diligence measures based on risk profiles
Drawing up a client admission policy
Maintaining documentation for at least 10 years
Conducting AML/CFT training programs for employees
Submitting to independent external audits

Depositor Protection

The FAGADI Law regulates the guarantee system for deposits, aligned with EU Directive 2014/49/EU. Key regulatory features include:

Repayment of deposits up to EUR100,000 in case of bank insolvency
Additional coverage up to EUR300,000 for certain types of deposits (e.g., real estate transactions, marriage/divorce payments)
FAGADI’s ex ante resources must reach 0.8% of guaranteed deposits by 2024
FAGADI may request extraordinary contributions from member entities in exceptional circumstances

Bank Secrecy

Andorran Criminal Law regulates the breach of professional secrecy. There are three types of exchange of information for tax purposes:

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

Prudential Regime

Law 35/2018 aligns with EU Directive 2013/36/EU and Regulation (EU) No 575/2013. Banking entities must maintain adequate internal capital, with a minimum amount subdivided into:

Common Equity Tier 1
Additional Tier 1
Tier 2 capital