Andorra’s Anti-Money Laundering Laws Under Scrutiny Amid EU Integration Talks
=====================================================
Andorra, a small principality nestled in the Pyrenees mountains between France and Spain, has been facing scrutiny over its anti-money laundering (AML) laws as it advances in negotiations for further integration with the European Union. A recent report highlights significant shortcomings in Andorra’s AML and anti-corruption regulations, which have raised concerns about its readiness to join an Association Agreement with the EU.
Shortcomings in Anti-Corruption and Anti-Money Laundering Laws
According to Martin Kreutner, Dean Emeritus of the International Anti-Corruption Academy, Andorra has failed to ratify key international instruments aimed at combating corruption and money laundering. These include:
- United Nations Convention against Corruption
- OECD Bribery Convention
- Council of Europe’s Civil Law Convention against Corruption
Moreover, Andorra lacks an independent anti-corruption authority, a crucial requirement in line with international standards.
Banking Sector Risks
Andorra’s banking sector faces significant risks due to the absence of a central bank and key regulatory legislations. With the sector accounting for over 20% of the country’s GDP, its banks attract large deposits from investors worldwide thanks to low tax rates and opaque corporate laws. This has led to scandals in recent years, including the massive international tax evasion scheme revealed in the Panama Papers.
Unresolved Case of Banca Privada d’Andorra (BPA)
The unresolved case of BPA, which was expropriated by the government in 2015, highlights how authorities mishandled money laundering allegations and may have wrongfully taken over the bank at a cost to taxpayers of hundreds of millions of euros.
Prioritizing Anti-Corruption and Anti-Money Laundering Regulations
Kreutner emphasized that Andorra must prioritize improving its anti-corruption and anti-money laundering regulations if it hopes to be allowed further EU integration. “Alleged and adjudicated scandals have rocked Andorra in recent years,” he said. “Understanding the state of play of the Principality’s anti-corruption and anti-money laundering architecture is critical.”
Conclusion
Andorra must take concrete steps to address its AML and anti-corruption shortcomings if it hopes to join the EU’s Association Agreement. The country’s banking sector, which accounts for a significant portion of its GDP, poses significant risks due to regulatory gaps. Until Andorra prioritizes improving its AML regulations, it may struggle to advance in its integration with the EU.