The financial sector of Andorra is a significant pillar of the country’s economy, attracting a considerable number of international investors and businesses alike. Owing to its advantageous tax system, political stability, and strategic location nestled between Spain and France, Andorra presents an attractive environment for foreign investment. Furthermore, the country’s commitment to maintaining financial transparency and its adherence to international regulations has bolstered its reputation as a reliable financial hub. Consequently, Andorra continues to draw the attention of high net worth individuals and multinational corporations, who seek to leverage the nation’s banking and financial services to facilitate their international operations.

In recent years, Andorra has made significant strides in strengthening its financial regulatory framework to align with international standards, including those set forth by the European Union (EU) and the Organisation for Economic Co-operation and Development (OECD). To this end, the government has implemented measures to combat money laundering, terrorist financing, and tax evasion, while also promoting transparency and cooperation between Andorran authorities and their international counterparts. These concerted efforts have helped the principality shed its previous image as a tax haven, and instead, emerge as a trusted and compliant jurisdiction for financial services.

Andorra’s financial regulatory landscape comprises three primary entities, each responsible for overseeing distinct aspects of the sector:

The Andorran National Institute of Finance (INAF): As the central regulatory body for the financial sector, INAF’s primary duty is to supervise and regulate banks, non-banking financial institutions, and other financial intermediaries. Its responsibilities include granting licenses, ensuring compliance with national and international regulations, and maintaining the stability and integrity of the Andorran financial system.

The Financial Intelligence Unit of Andorra (UIFAND): Tasked with preventing and detecting money laundering and terrorist financing activities, UIFAND analyzes suspicious transaction reports, conducts investigations, and cooperates with national and international authorities to combat illicit financial activities. UIFAND also plays a crucial role in promoting awareness and training among financial institutions to ensure compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

The Andorran Insurance Agency (AAA): Responsible for supervising and regulating the insurance sector, the AAA ensures the stability and solvency of insurance companies operating within Andorra. The agency’s duties include licensing insurers, monitoring their compliance with regulations, and fostering consumer protection within the industry.

Even though not strictly considered a financial regulator, the Andorran deposit insurance scheme is called the Andorran Deposit Guarantee Fund (Fons de Garantia de Dipòsits d’Andorra or FAGADI). Its primary duty is to protect depositors’ funds in the event of a bank failure or insolvency. FAGADI guarantees the reimbursement of deposits up to a certain limit per depositor and per institution, thereby ensuring the stability and confidence in the Andorran financial system.