A solid system
The BPA affair is a setback for Andorra, which has made great efforts to open up its financial sector and conform to international norms in recent years. The country was removed from the Organisation for Economic Co-operation and Development’s (OECD’s) list of unco-operative tax havens back in 2009. Andorra has undergone a number of examinations, including by MoneyVal (a monitoring board of the Council of Europe) and the OECD, concerning information exchange.
Andorra has been looking at the evolution of its financial model and is working with San Marino, Liechtenstein and Monaco on an agreement with the EU.
Mr Saboya says: “The Andorran banks have solvency ratios of 20%, liquidity ratios of 65% and family ownership, and they are managed well… this is a valid model. The expansion of the Andorran banks has mainly come through the acquisition of Spanish banks, not so much through their acquisition of South American assets.
“Good practices in AML are compulsory and we have to ensure the system shows itself to be compliant. In 2011, we signed a monetary agreement with the EU. The entire EU legal framework is in place in Andorra. All the legislation is going to be equivalent to the EU system. We have the legal framework. We have been developing a comprehensive tax framework, to balance the public budget, we have signed double taxation agreements with Spain, France and Luxembourg, and we are in the second round of talks for a double taxation agreement with Portugal. We are looking to build a services sector-based economy. We want to sell services, such as consultancy, to other parts of the world.
“The Andorran government is talking to Monaco and San Marino about setting up a group to get access to the EU internal markets. We are looking at diversifying its economy through expanding our services sector. We are reforming the tax system. We are confident that BPA was an isolated case and it was the responsibility of high-level management.”
Isolated case
The Andorran system has sufficient internal controls to prevent contagion, according to Miquel Soca, the head of fixed-income securities and foreign exchange at Morabanc, the country’s smallest bank. “Contagion won’t happen, because Spain and France are working with Andorra to prevent it. The Spanish prime minister is committed to preventing contagion. He has been discussing the problem with Andorran politicians. The liquidity and solvency ratios of the Andorran banks are very high,” he says.
EU levels of regulation underpin the stability of Spanish subsidiaries of Andorran banks, says Mr Soca, and he is mystified by the closure of Banco de Madrid. “The way that Banco de Madrid was liquidated so quickly by the Spanish authorities is strange. There was no reason for that. They could have put in a large bank to take it over. Instead it is going to be closed down. I don’t anticipate this being contagious.”
A spokesperson for the Association of Andorran Banks (ABA) says: “The Fincen probe has actually shown that this is an isolated case. These practices are by no means widespread in the sector. That’s how we see it and that is how it has been seen both internationally and also by our own customers.
“For years now, Andorran banks have been adopting and working under international standards and protocols in the area of money laundering and the financing of terrorism, just as banks have done in continental Europe as a whole. We at the ABA are confident we’ll come out of this even stronger as a solid financial market.”
Source link : https://www.thebanker.com/Andorra-acts-to-save-banking-reputation-1433145720
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Publish date : 2015-06-01 07:00:00
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