Financial Crime World

Andorra Enshrines Principle of Variable Remuneration

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The government of Andorra has introduced new regulations aimed at promoting fairness and transparency in the banking sector. The regulations ensure that variable remuneration does not exceed 200% of fixed component for each individual, ensuring a fair distribution of rewards.

Inspiring Principles

According to Law 8/2013, Andorran banking entities must follow inspiring principles when implementing remuneration policies, including:

  • Salaries and discretionary retirement benefits for senior management
  • Risk-takers
  • Internal control staff
  • Employees who receive lump-sum payments similar to those of senior management

Failure to comply with these provisions may result in sanctions under the Disciplinary Law.

AML/KYC Requirements

Andorra is committed to combating money laundering and terrorism financing through the implementation of the Fourth Anti-Money Laundering Directive and FATF’s recommendations. Banking entities must comply with several obligations, including:

  • Identifying clients and transactions
  • Reporting suspicious activities
  • Maintaining confidentiality

Depositor Protection Regime

The FAGADI Law regulates the guarantee system for deposits, aligning with EU Directive 2014/49/EU. If an Andorran banking entity becomes insolvent, clients’ deposits up to EUR100,000 will be repaid, with additional coverages available in exceptional cases.

Bank Secrecy Requirements

The Andorran Criminal Law regulates the breach of professional secrecy, punishable by imprisonment and disqualification. Bank secrecy no longer applies in Andorra due to international requirements on tax information exchange recommended by the OECD.

Prudential Regime

Law 35/2018 aligns with EU directives on prudential supervision, requiring banking entities to have:

  • Minimum internal capital adequate for their risk profile
  • Capital, liquidity, and related risk control requirements

These regulations aim to strengthen Andorra’s financial sector by promoting transparency, fairness, and stability. Banking entities must comply with these new requirements to ensure the continued trust of customers and investors.