FATF AML Deficiency List
Non - Compliance with FATF 40 + 9 Recommendations
Non - Compliance with FATF 40 + 9 Recommendations
Corruption Index (Transparency International & W.G.I.
)World Governance Indicators (Average Score)
Andorra is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The latest follow-up to the Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Andorra was undertaken in 2019. According to that Evaluation, Andorra was deemed Compliant for 10 and Largely Compliant for 27 of the FATF 40 Recommendations. It was also deemed Highly Effective for 0 and Substantially Effective for 4 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.
US Department of State Money Laundering assessment (INCSR)
Andorra was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Although the Principality of Andorra is not a regional financial center, it has a well-developed financial infrastructure. The non-financial crime rate is low in Andorra, with few instances of drug-related offenses or other serious crimes. As of the end of 2015, the Andorran banking system is comprised of four banking groups.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index N/A
World Governance Indicator – Control of Corruption 88
Tourism, retail sales, and finance are the mainstays of Andorra's tiny, well-to-do economy, accounting for more than three-quarters of GDP. Andorra's duty-free status for some products and its summer and winter resorts attract millions of visitors annually, although the economic downturn in neighboring countries has curtailed the number of tourists. Agricultural production is limited - only about 5% of the land is arable - and most food has to be imported, making the economy vulnerable to changes in fuel and food prices. The principal livestock is sheep. Manufacturing output and exports consist mainly of perfumes and cosmetic products, products of the printing industry, electrical machinery and equipment, clothing, tobacco products, and furniture. Andorra is a member of the EU Customs Union and is treated as an EU member for trade in manufactured goods (no tariffs) and as a non-EU member for agricultural products. Andorra uses the euro and is effectively subject to the monetary policy of the European Central Bank. Andorra's comparative advantage as a tax haven eroded when the borders of neighboring France and Spain opened; its bank secrecy laws have been relaxed under pressure from the EU and OECD.
Slower growth in Spain and France has dimmed Andorra's economic prospects. Since 2010, a drop in tourism contributed to a contraction in GDP and a sharp deterioration of public finances, prompting the government to begin implementing several austerity measures to reduce the budget deficit, including levying a special corporate tax. The Government is also planning to institute an income tax at the behest of the Organization for Economic Cooperation and Development. The new tax will apply to anyone who lives in the principality for at least 183 days in a calendar year. The first $30,000 of income will be tax free, with the next $20,000 taxed at 5%. The balance of income exceeding the initial $50,000 will be taxed at 10%, which is still less than in most West European countries. Andorra’s Government also relaxed its residency and investment laws in 2012 to make the country more attractive to foreign investors. A person now must spend 90 days a year in the principality to qualify for residency, compared with the previous 180-day requirement. Foreigners now have the same property ownership rights as citizens. In addition, three new categories of residency permits were introduced. Anyone who is retired or at least not working in Andorra can obtain a permit in the first category by making a financial investment in the country of at least €400,000, which can include a property purchase.
Investment Climate - US State Department
Andorra is open to, and actively seeking to attract, foreign investment. The Andorran economy is undergoing a process of diversification centered largely on the sectors of tourism, trade, property, and finance. To provide incentives for growth and diversification in the economy, the Andorran government began sweeping economic reforms in 2006. The Parliament approved three main regulations to complement the first phase of economic openness: the law of Companies (October 2007), the Law of Business Accounting (December 2007), and the Law of Foreign Investment (April 2008 and June 2012). From 2011 to 2015, the Parliament approved direct taxes in the form of a corporate tax, tax on economic activities, tax on income of non-residents, tax on capital gains, savings taxation, and tax on individual incomes. These regulations aim to establish a transparent, modern, and internationally comparable regulatory framework.
The principal objectives of the economic reforms are to attract those investments and businesses which can contribute most to Andorra’s economic development, offer greater diversification of the economy, and contribute high added value. Prior to 2008, when the first law on investment was approved, Andorra had limited foreign investment opportunities, mainly due to concerns about the impact of foreign firms on such a small economy. As a consequence, non-citizens were allowed to own no more than 33 percent of a company. Only after residing in the country for a minimum of 20 years were foreigners entitled to own 100 percent.
Andorra has a developed economy and a free market, with per capita income above the European average and above the level of its neighbors, Spain and France. The country has developed a sophisticated infrastructure including a one-of-a-kind micro-fiber-optic network for the entire country. Andorra’s retail tradition is well known around Europe, thanks to more than 1,400 shops and business, the quality of their products, and competitive prices. Products taken out of the Principality are tax-free up to certain limits, after which the purchaser has to declare those which exceed the allowance.
The country is seeking to attract entrepreneurs, talent, innovation, and knowledge. In doing so, Andorra has been seeking the advice of American consultancies and has fostered an important project with MIT on innovation and big data.
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