Andorra strengthens controls on digital assets to combat money laundering

The Government of Andorra has approved two bills aimed at strengthening oversight of the financial system, particularly in relation to digital assets and the prevention of money laundering, while also updating regulations on market abuse.

Government spokesperson and minister Guillem Casal explained at the press conference following the Council of Ministers that the first bill amends the Law on the Prevention and Fight against Money or Asset Laundering and Terrorist Financing. 

The reform incorporates provisions from European Union Regulation 2023/1113 into Andorran law and expands the obligations currently applicable to fund transfers.

The main change is that these obligations will also apply to digital asset transfers, an area at the centre of the reform.

Greater traceability for virtual assets

According to Casal, the new framework will strengthen the traceability of transactions involving digital assets and introduce new obligations for virtual asset service providers.

The aim is to make it easier to detect and investigate potential illicit activities in a context marked by the digitalisation of the economy and the increasingly widespread global use of virtual assets.

The reform seeks to adapt Andorra’s mechanisms for preventing money laundering and terrorist financing to new forms of transferring money and value that have emerged with the expansion of the digital economy.

New update to combat market abuse

The second bill approved by the Government amends the legislation governing the organisation and operation of financial system entities and market abuse.

Casal recalled that Andorra had already amended this legislation around two years ago to update and modernise it in line with international standards. The Government is now introducing further changes to incorporate the latest developments in European market-abuse regulations.

Among the changes is an update to the rules aimed at preventing market abuse, particularly regarding the information and transparency that financial institutions must provide to their clients.

Further alignment with European regulations

The minister stressed that this information must be easy to verify and understand, including for clients who are not familiar with financial practices.

The reform also introduces changes to the management of inside information and simplifies certain administrative obligations for financial institutions, while maintaining guarantees for transparency and investor protection. 

With the approval of the two bills, the Government considers that it is strengthening the solidity and competitiveness of Andorra’s financial system, while continuing to advance the alignment of the Principality’s legislation with European standards.