Banking sector

The Andorran banking sector has more than 80 years’ experience in this field.

Regulatory bodies

Andorran banks are supervised and regulated by the National Finance Institute (Institut Nacional Andorrà de Finances or INAF). As the financial markets authority, INAF promotes the smooth operation and stability of the financial system.

The Andorran Banks Association (Associació de Bancs d'Andorra or ABA) is responsible for self-regulation in the financial sector and for ensuring that good banking practices are maintained. It brings together all the banks currently operating in Andorra.

The  Financial Intelligence Unit of Andorra promotes and coordinates actions aimed at preventing money laundering and the financing of terrorism. It follows the guidelines issued by the European Council’s MONEYVAL Committee and the 40 recommendations of the Financial Action Task Force (GAFI).

Reputation and solvency

The Andorran financial system has an excellent reputation thanks to its solid and rigorous compliance with international standards. This rigour is backed up by organisations such as the International Monetary Fund (IMF) and the Council of Europe.

The high levels of solvency of the Andorran banking system are the result of a sound capitalisation policy. Historically, Andorra has maintained more stringent minimum solvency and liquidity ratios than in most other countries.

Towards tax transparency and international standardization

The Principality of Andorra is adapting its legislative framework to the development of common international practice, and particularly in terms of the regulations governing banking, finance, money laundering prevention and terrorism financing, to the European Union and OECD regulations.

From a standardization standpoint, it has also developed a transparent and modern legal framework, in accordance with existing international standards in other countries and financial areas.

The Paris Declaration (2009) saw the start of this transformation process with the country’s commitment to embrace the OECD standards. The signing of the Mutual Administrative Agreement with the OECD (2013) marked a step forward in terms of the exchange of tax information on demand. Accordingly, Andorra has already managed to sign tax information exchange agreements with 26 countries.

Concurrently, the signing of the Monetary Agreement with the EU in 2011 has enabled the country to adopt the Euro as its official currency and modernise its fiscal map with the introduction of its own tax system, which also entailed the signing of the agreements to avoid double taxation with six countries which support economic openness.

In January 2017, it is planned that the legislation that will regulate the automatic exchange of tax information (IAI) will enter in force, bringing Andorran banks in line with other European banks, as well as in relation to new global standards for the automatic exchange of information, in accordance with the OECD and G-20 international regulations.

Source: Andorran Banks Association (ABA)