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The main characteristics about the Principality of Andorra financial market:

Solvency, discretion and political stability.

The Principality of Andorra has had its own political and social identity for more than a thousand years, and in the second half of the twentieth century has developed its own banking system with great solvency, based on efficiency and discretion principles.

The social and political stability, historically have been characteristics of this thousand-year-old country, as well as, the strict regulation of solvency coefficients, appropriately met by the eight entities existing on the market, underline the immense prestige of the Principality of Andorra as a financial market, able to provide services of private banking at the highest international level.

The excellent rating “Aa2” given by Moody’s Investors Services to the Principality of Andorra, accredits without a doubt its solvency, political stability and prestige as a financial market.

In 1960 the Andorran Bank Association, ABA, was created and under its supervision an agreement was signed in 1990 in regards to the diligence obligation from the Andorran banking establishments, which included a series of resolutions to be assumed:

1. Application of the established criteria by the Basle Committee on banking regulations and supervisory practices, known as the "Cook Committee".
2. The obligation to submit their financial statements for review by independent external auditors and send these financial statements to the public authorities.
3. The obligation to ensure the identity of their customers is accurately verified.
4. Maintain the principle of banking secrecy and security to ensure that the financial system is not used for money laundering resulting from serious criminal offences according to the Andorran Law provisions.

During the year 2000, the North-American authorities recognized Principality of Andorra as a country conforming to the “Qualified Intermediary” regulation, which enabled to apply for “QI” status the 8 financial entities to form the present Andorran banking system.

In recent years, and with the development of the financial markets, the number of investment funds managed in the Principality has experienced substantial growth: rising from 25 investment funds in 1994, to 103 in 2002. During 2000, two new investment fund managers were set up, both with the most modern analysis technology.

These facts consolidate the high quality and financial prosperity of the financial services of the Principality of Andorra and have recently been backed up from a legal viewpoint by very important Laws:

1. 1989 Constitution Act of the National Andorran Finance Institute
2. 1993 Provisional measures Act for the organization and regulation of the financial sector
3. 1993 Modification Act of the National Andorran Finance Institute (INAF) Constitution law
4. 1993 Organizational Act of the Financial System
5. 1994 Regulatory Act of mandatory investments’ coefficient
6. 1995 Banking secrecy and prevention of money laundering Protection Act, founded on the Andorran Constitution
7. 1995 Regulatory Act of the reserves to guarantee deposits and other operational obligations to maintain and deposit into the entities included in the financial system
8. 1996 Amendment Act to the regulatory act of the financial entities’ solvency and liquidity criteria
9. 1996 Regulatory Act for the operative faculties of the diverse components of the financial system
10. 1996 Regulatory Act of the financial entities’ solvency and liquidity criteria
11. 1997 Regulatory Act of the disciplinary regime of the financial system
12. 1998 Regulatory Act of the constitution of new banking entities under Andorran law
13. 1998 Regulatory Act of the minimum share capital of the banking entities under Andorran law
14. 1998 Act of the basic administrative regime of the banking entities
15. 1999 United Nations convention against illicit traffic of narcotics and psychotropic substances
16. 1999 Convention regarding the laundering, discovery, appropriation and confiscation of products derived from criminal activity - Strasbourg, November 8, 1990
17. 2000 Regulatory Act of the measures to guarantee the Principality’s transition into the Euro
18. 2001 Act on the international penal cooperation and the fight against the laundering of capital or securities arising from international delinquency, which came into effect on July 24, 2001, following its approval by the Andorran Parliament last December 29th, and regulatory act of the international cooperation, and the fight against money laundering or securities arising from international delinquency (2002)

With the approval of the last Act, Andorra is within the leaders in regards to judicial cooperation, in maintaining inviolable the guarantee of its client’s confidentiality and the professional secrecy of the banking sector.

Empirically, it has been demonstrated for a long time, the duty of discretion and protection of banking information is perfectly compatible with the fight and cooperation against organised crime.

700 years without conflicts and with no connection to criminal businesses along its history, combined with the clarity demonstrated in international cooperation in the fight against organised crime, the control and supervision exercised by INAF (Andorran National Institute of Finance), and the broad sector’s legislative provisions, all constitute irrefutable evidence and values of this reality.

Presently, the Andorran financial system is formed by:

1. 6 banking entities
2. 10 Financial investment entities
3. 5 Patrimony management entities
4. 1 non banking financial entity of specialized credit

Andorra does not have its own currency, but the national budget is prepared in euros. Moreover, all currencies circulate freely in the country and the money exchange is also unrestrained.

In 2000 Andorra adopted the Euro, according to the law, integrating into the legal framework the basic principles which are to regulate the introduction of the Euro into the Principality, as to make the transition with sufficient guarantees for all the financial agents and for consumers.

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