Andorra Table
of Statutes
This is a non-exhaustive list of the main Andorran
statutes affecting offshore and non-resident
business. The statutes are listed in alphabetical
order – click on the statute for a fuller
description of the statute or the legal regime
it forms part of.
Corporations Act 1983
Foreign Investment Law
2008
Immigration
Law (Llei Qualificada d'Immigracio) 2002
Law on Passive Residence Permits 1996
Law of Protection of Banking Secrecy and of
Prevention of Laundering of Money or of Assets
Deriving from Crime 1995
Law Regulating the Financial System 1993
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Andorra Banking
Law
Banks and other financial institutions in Andorra
are regulated by the Andorran National Financial
Institute (INAF) under the Law Regulating the
Financial System 1993.
Andorran
banks are all members of the Agrupacio de Bancs
Andorrans, which operated a system of self-regulation
until the regulatory law was passed in 1993.
The banks have very conservative policies, and
high solvency ratios: depositors' funds are
guaranteed under a 1997 law, but only one banking
institution has ever failed in Andorra; Sobanca
in 1968, and the remaining banks stepped up
to honour its liabilities in order to preserve
the confidence in the system.
The
over-riding characteristic of Andorran banks
that attracts foreign depositors and investors,
apart from the absence of taxes, is secrecy.
Numbered accounts, made available only to top-quality
clients, are said to be known only to 'the customer,
the banker and God'. General accounts, also
secret under the law, are highly protected as
well.
The
Andorran Penal Code includes specific provisions
against disclosure of details of a bank account
to anyone, including the authorities. Only a
court order (judge's warrant) can force disclosure.
In
June, 2004, however, Andorra was obliged to
accept the EU's Savings Tax Directive, and as
from July, 2005, is imposing a withholding tax
of 15% (20% from July 1, 2008) on returns on
savings paid to citizens of Member States of
the EU, of which 75% is remitted onwards to
the States concerned.
In
response to international concern over money-laundering,
Andorra introduced the 'Law of Protection of
Banking Secrecy and of Prevention of Laundering
of Money or of Assets Deriving from Crime' in
1995. This law requires financial institutions
to report any suspicious money movements to
the INAF; and the INAF is then entitled to pass
on such information to foreign countries if
an Andorran judge orders it. However, this will
only be done if there is prima facie evidence
of a crime (which in Andorra definitely does
not include tax avoidance or evasion), and even
then is only permitted to countries which have
banking secrecy laws, thus excluding, for instance,
the UK and the US. In most circumstances, the
effect of the law is to strengthen secrecy,
not weaken it.
The
Law is quite explicit about wanting to balance
the attack on money-laundering on the one hand
against the need to preserve banking secrecy
on the other. Article One reads: 'The present
law has as its object the protection of banking
secrecy and the prevention of the laundering
of money or assets deriving from drug trafficking
and other criminal activities'.
The
Law defines money-laundering (and offences against
banking secrecy) in terms of the existing Penal
Code: this provision clearly excludes tax matters
from the ambit of the Law.
The
Law imposes 'know-your-customer' rules on financial
institutions and intermediaries ('fiduciaries').
The
Law permits disclosure only in the context of
judicial proceedings and in response to an Order
from a 'Batlle' (Andorran court).
The
Law doesn't just impose a passive duty on financial
institutions and intermediaries; there is a
positive requirement to report what appear to
be suspicious transactions (preferably in advance)
to the duty Batlle. The Batlle then either takes
appropriate action, or authorises the transaction;
the financial authorities are kept informed
in either case. The Law specifically prohibits
any person who is reporting a suspect transaction
from giving any information about it to the
subject of the suspicions, or to any third party.
Financial
institutions or intermediaries which infringe
the Law are subject to penalties depending on
the severity of the infringement:
- Minor
infractions are punished with a fine of up
to 1,000 euros;
- Serious
infractions receive up to six months' suspension
and a fine of up to 12,000 euros;
- Very
serious infractions receive suspension up
to 3 years, or permanent suspension, and a
fine of up to 250,000 euros.
The
Penal Code provides imprisonment up to 4 years
for malicious infraction of the privacy law,
and 7 years if done for gain.
In
August, 2001, a Department for the Prevention
of Money Laundering (Unitat de Prevenció
de Blanqueig - UPB) was established. The UPB,
which is equivalent to a Financial Intelligence
Unit under Egmont Group rules, is authorized
to carry out unannounced inspections and hands
information to the public prosecutor's office
or to the government.
The
governing council of the UPB consists of two
financial officials who are appointed by the
Minister of Finance, a judge nominated by the
Consell Superior de Justícia, and two
police officers who are appointed by the Minister
of the Interior.
Since
2002, the UPB has been permited to enter into
cooperation agreements on criminal matters with
foreign authorities. Subsequently, the UPB has
signed agreements with the corresponding anti-money
laundering authorities in Bahamas, Belgium,
Dutch Antilles, France, Luxembourg, Monaco,
Peru, Poland, Portugal, Spain, and Thailand.
It has cooperated with foreign authorities to
detect and prosecute criminal activities and
freeze accounts in various occasions. It has
also shared information and cooperated with
other Egmont group members.
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