Andorra

CENTRAL AUTHORITY FOR REPORTING.

Unitat d’Intelligència Financera d’Andorra (UIF) modified by law 28/2008. Formerly known as Unitat de prevenció del Blanqueig (UPB).

OTHER ANTI-MONEY LAUNDERING REGULATOR(S).

None.

ARE LAWYERS COVERED BY MONEY LAUNDERING LEGISLATION?

Yes. Lawyers are designated non-financial businesses and professions (DNFBPs), which are subject to AML regulations. 

Lawyers are subject to AML regulations when they take part in the following activities:

  1. Buying and selling real property or business entities;
  2. Management of customer money, securities or other assets;
  3. Opening or management of bank accounts, savings or securities accounts;
  4. Organisation of contributions necessary for the creation, operation or management of companies;
  5. Creation, operation or management of companies, contractual fiduciary arrangements (fideicomisos) or similar structures; or when acting for their customers in financial or real estate transactions.

In any event, lawyers are not required to report their suspicions if the relevant information was obtained through the advice they provided in relation to preparing or representing the client in a legal proceeding before a Court.

LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.

  • Criminal Code of 2005, including amendments of 2007 (law 17/2007 amending the criminal code and law 29/2007 amending article 409 of the Criminal Code), 2008 (law 15/2008 amending Criminal Code), 2012 (law 18/2012 amending Criminal Code) and 2013 (law 18/2013 amending Criminal Code).
     
  • Code of Criminal Procedure, with its further amendments
     
  • Law on International Criminal Co-operation, the Fight Against the Money Laundering or the Products of International Crime, 2000,modified by the law 28/2008(LCPI) including amendment of 2011 (law 4/2011amending the LCPI) and 2013 (law 20/2013 amending the LCPI).
     
  • Decree of 13-05-2009 and approving the rules of the Law on International Criminal Cooperation, and the fight against the laundering money or the products of International Crime and against terrorist financing amended by Decree of 18-05-2011.

ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

According to Article 42 of the LCPI, the AML law applies to all natural or legal persons whose economic activities may channel or facilitate money laundering operation or terrorist financing.

 

The law does not differentiate between resident and visiting lawyers.

LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.

The Andorran Bar Associationcomprises 344 members, 169 of them being active lawyers. The profession is governed by a 1993 Code containing statutes and ethical rules.

The statutes are in the process of revision and guidelines concerning AML have been prepared by the Bar Association, together with regular conferences and training provided to lawyers.

IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

As of this date, lawyers are to report directly to UIF any suspicious operation and the UIF is the body supervising compliance by lawyers.

Currently, the Andorran Bar Association is trying to establish itself as an intermediate body, channelling all suspicious declarations done by lawyers (as Art. 52.3 of LCPI allows).

DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.

Article 49(1.c) LCPI:

  1. The parties under obligation must ascertain the identification of their customers and of their beneficial ownership by requiring them to present an official document when establishing any business relationship:

    a) If the customer is an individual, the party under obligation must verify the customer’s identity, address and professional activity. To this end, the customer must be asked to show an official identity document with a photograph, a copy of which must be kept.

    b) If the customer is a legal person, the party under obligation must require:

    i) An authentic document accrediting its name, legal form, registered office and corporate purpose, retaining a copy
    ii) Justification of the identity of the individual who, according to the documentation presented, has power to represent the entity, and of the powers granted.

  2. Obtain information on the purpose of the business relationship with the customer.
     
  3. The data collected must be updated so that the customer can be correctly identified when establishing the business relationship or carrying out a transaction susceptible to money laundering or terrorism financing.

Article 49 bis LCPI:

  1. The parties under obligation must diligently verify the identity of the customer and, if necessary, the beneficial owners, before establishing any business relationship or carrying out a transaction.
     
  2. Notwithstanding what is established in paragraph 1, the identity of the customer and the beneficial owner may be verified after the first business relationship if this is necessary to avoid obstacles to the carrying out of the transaction, provided that the risk of money laundering or terrorism financing is slight. The identification process must be conducted as soon as possible thereafter.
     
  3. In the absence of life insurance, the verification of identity can be done after the policy is contracted, provided that it is done before the pay-out or at the time the beneficiary intends to exercise rights vested under the policy.
     
  4. Bank accounts may be opened prior to the identification of the customer provided that there are safeguards in place to ensure that transactions are not carried out by the customer or on its behalf until the identification duties have been fully complied with and verified.
     
  5. In the event that the customer cannot be identified in accordance with Article 49, the financial parties under obligation may not establish a business relationship or carry out transactions for the customer and they have to value the transmission of communications with UIF.

    In the case of relationships that have already started, the business relationship must be ended and consideration given to sending a communication to the UIF.
     
  6. The financial parties under obligation must also follow the due diligence procedures with respect to existing customers at the appropriate moment during their risk analysis.
 

DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS? 

Yes. Detailed below. 

 

ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

Yes. Article 49 Fourth of the LCPI provides the following:

In addition to the measures established in Article 49, the parties under obligation must apply, in accordance with a risk analysis, enhanced due diligence measures in those situations which by their nature can represent a higher risk of money laundering or terrorist financing and at least in the following situations: 

  1. When the customer was not physically present for identification, specific and adequate measures must be adopted to compensate for the increased risk, for example through one or several of the following measures: 

    i) Ensuring that the customer’s identity is established by additional documents, data or information.
    ii) Adopting supplementary measures to verify or certify the documents supplied, or requiring a certificate of confirmation issued by a credit or financial entity subject to this Law or an entity from any EU country or other equivalent country.
    iii) Ensuring that the first payment is done through a bank account where the client appears as owner and opened in a financial entity subject to this law or a financial institution established in an EU State or equivalent third party.
     
  2. In cross-border correspondent banking relationships with respondent foreign entities, the Andorran credit entities must: 

    i) Gather sufficient information about the respondent entity to understand the nature of its activity and determine, from publicly available information, its reputation and the quality of its supervision.
    ii) Assess the respondent entity’s anti-money laundering and anti-terrorist financing controls.
    iii) Obtain approval from management before establishing new correspondent banking relationship.
    iv) Document the respective responsibilities of each entity.

    With respect to payable-through accounts, there must be guarantees that the respondent credit entity has verified the identity of and performed ongoing due diligence on the customers who have direct access to the accounts of the correspondent Andorran entity and by request, can provide information necessary to identify and verify the costumer and the beneficial owner.
     
  3. In relation to transactions or business relationships with politically exposed persons entrusted with prominent public functions in other countries, the financial parties under obligation must:

    i) Have appropriate risk-based procedures to determine whether the customer is a politically exposed person.
    ii) Obtain approval from management to establish business relationships with these customers.
    iii) Adopt adequate measures to determine the source of wealth and funds that are involved in the business relationship or transaction.
    iv) Conduct enhanced ongoing monitoring of the business relationship.

    These obligations also apply when after the initial identification and verification of a customer or beneficiary, these beneficiaries or customers become politically exposed persons.
     
  4. Establishing or continuing correspondent banking relationships with shell banks is prohibited. Appropriate measures must be taken to ensure that no correspondent banking relationships are established or maintained with banks that are known to permit their accounts to be used by shell banks.
     
  5. Appropriate measures must be taken to prevent products or transactions that might favour anonymity being used for money laundering or terrorist financing purposes.

ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

Yes. Article 49 third of the LCPI provides the following:

  1. Notwithstanding what is established in the previous Articles, the partiesmay reduce the performance of the obligations set out in points (c), (d) and (e) of paragraph 1 of Article 49 and paragraph 1 of Article 49 bis of this law when the customer is a financial party bound by this Law, or a credit or financial entity established in an EU country or other equivalent country.

    UIF have to keep within their website an updated list of the states or territories which have the condition of equivalent country under the purpose of this law.
     
  2. The financial entities may reduce the performance of the obligations set out in points (c), (d) and (e) of paragraph 1 of Article 49 and paragraph 1 of Article 49 bis of this law in the following cases: 

a)     Life insurance policies with annual premiums not exceeding EUR 1,000 or a single premium not exceeding EUR 2,500;

b)    Insurance policies for pension plans, provided that they do not include a surrender clause and they cannot be used as collateral for a loan;

c)     Pension and similar plans which include the payment of retirement benefits to employees, where the contributions are made by way of deductions from the salary and the rules of the plan do not permit the assignment of the participation in the plan;

d)    Electronic money when the maximum amount stored is not more than EUR 150, if not rechargeable or the total amount available in any calendar year is limited to EUR 2,500, except when the bearer demands the redemption of a sum of EUR 1,000 or more in the same year;

e)     Other products or transactions representing a low risk of money laundering or terrorist financing in accordance with the technical communiqués of the UIF.

In all cases, the files of all operations must contain a brief reference to identify and justify the UIF technical note applied to any case.

  1. The financial entities can also reduce the performance of the obligations set out in points (c), (d) and (e) of paragraph 1 of Article 49 and paragraph 1 of Article 49 bis of this law in relation to the following clients:

    - Listed companies in European markets and in third countries with information regulations compatible with European regulations over supervision and transparency of financial markets.
    - Institutions or entities that act on their behalf and that are part of the Andorran Public Administration, a European State member or European or equivalent third party institutions.
     
  2. In all cases mentioned, enough information has to be gathered to confirm that the client meets the necessary conditions to apply simplified due diligence measures, which at least includes identifying and verifying the client, and following the commercial relationship to ensure conditions still apply at all times.
     
  3. In the following cases, no simplified due diligence measures can be applied in relation to persons and entities determined by the European Commission and as published on the UIF’s website.

    - There is a suspicion of money laundering or terrorism financing
    - When there are doubts of the accuracy of documents and information obtained
    - When there are situations that may represent an elevated risk of money laundering or terrorism financing
 

ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

Yes. According to Article 50 of the LCPI, CDD obligations can be delegated to third parties being also submitted to AML in Andorra, EU Countries or equivalent third states. However, lawyers still remain responsible for due diligence being properly carried out.

WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

The LCPI in Article 46 places parties under an obligation to declare to the UIF any transaction or planned transaction relating to cash or securities that they suspect may involve an act of money laundering or terrorist financing.

The declaration must be accompanied by all the necessary documentation. Thereafter, the UIF must be updated with any new information.

For lawyers, this is limited to clients involved in:

  • Buying and selling real property or business entities;
  • Managing of customer money, securities or other assets;
  • Opening or management of bank accounts, savings or securities accounts;
  • Organisation of contributions necessary for the creation, operation or management of companies; or
  • Creation, operation or management of companies, contractual fiduciary arrangements (fideicomisos) or similar structures or when acting for their customers in financial or real estate transactions.

No obligation exists where the information is obtained in order to assess the legal situation of a client, or when the lawyer is acting in defence or representation of the client in trials or in relation to those, including the advice for initiating or avoiding legal actions. 

Article 47 of the LCPI establishes that the obligation to declare must be met regardless of the country where the alleged crime of money laundering of terrorist financing has been committed or could have been committed, or where the funds come from or are destined.

Additionally, the declaration must be made before the party under obligation has carried out the financial or economic transaction in question,unless in a case when abstention is not possible or would compromise pursuit of the beneficiaries of the money laundering transactions or terrorist financing.

DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

Yes, as stated above.

According to Article 45 of the LCPI a lawyer is not bound by the obligations of the AML law with regard to information they receive from or obtain about one of their clients, in the course of ascertaining the legal position for their client or performing their task of defending or representing that client in, or concerning judicial proceedings, including advice on instituting or avoiding proceedings, whether such information is received or obtained before, during or after such proceedings.

DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?

Article 47 of the LCPI provides that the UIF will take all appropriate measures to protect the parties under obligation against any threat or hostile action arising from their compliance with the obligations imposed by the AML law. It also states that no responsibility applies to the person who reports an activity to UIF.

In particular, the identification of the issuer of declarations of suspicion will be kept confidential in all administrative and legal proceedings originating from or related to the declarations made.

ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?

The LCPI in Article 47 requires all declarations to be made before the financial or economic transaction occurs, except in the cases previously mentioned. Once this is done, the UIF will determine whether there are sufficient indicators to warrant a suspension of the transaction.

This suspension may not exceed five days, which is the maximum term that the UIF has to clarify whether or not the indications have been proved and to authorise the execution of the transaction, or otherwise send the file to the public prosecutor’s office.

IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE

Yes. According to Article 48 of the LCPI, the obligated party must keep all information affecting their clients’ confidential information.

Under no circumstances can the person(s) affected by the declaration, or any third party, be informed of declarations made or of the proceedings underway.

DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.

There are no specific limitations provided in the laws, but lawyers must comply with all applicable laws regarding money laundering.

ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE. 

Yes. Article 49 (e) requires that all CDD data be updated so that customers can be correctly identified when establishing the business relationship or carrying out a transaction susceptible of involving money laundering or terrorism financing.

DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.

Article 60 of the LCPI states that as a general rule, infringements expire after three years. If action is taken to conceal the infringements from the control bodies, they prescribe after ten years.

 

The period on the statute of limitations starts on the date the infringement is committed. For infringements resulting from a continuous activity, the start date of the statute of limitations corresponds with the end of the activity or the last act constituting an infringement. The statute of limitations is interrupted by the start of the sanction proceedings.

HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?

Very few investigations are open in which lawyers might be involved, and no judgements exist as of today against lawyers.

HAS THE FINANCIAL ACTION TASK FORCE (FATF) OR A FATF-STYLE REGIONAL BODY CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS? 

MONEYVAL conducted a mutual evaluation of Andorra and issued a report dated 14 March 2012. Since then, Andorra has written a progress report to MONEYVAL dated 14 March 2012. The progress report detailed all the major changes made by Andorra to its AML framework since the mutual evaluation.

Several amendments to AML law have been completed, and there is currently a new law to amend existing AML in progress at the parliament. It is expected to be approved soon.

Information provided by:

Marc MAESTRE
MAESTRE & Co ADVOCATS
Baixada del moli 15, 1er
AD500 Andorra la Vella
Principality of Andorra
Tel: +376 809 650
E-mail: legal@mcadvocats.ad


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