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Andorra - Banking

Although Andorra has never been part of the European Union (EU) or European Economic Area (EEA), and is not part of the Schengen Area, it has been using the Euro as its sole official currency since January 2002.

Using Credit Cards In Andorra

Andorra is a modern, developed principality with world-leading interconnectivity to broadband and IT systems. As a result, credit cards are widely used by cafes, restaurants, hotels, shops, leisure activity centres and most other establishments. Visa, Mastercard and American Express are the most commonly used credit cards.

Using Cash In Andorra

Cash will be welcome in nearly all transactions where you are present unless that transaction involves a large sum of money.

There is a good coverage of ATM machines in all urban areas of Andorra so accessing your cash is not likely to be a problem.

In the event that an ATM charges you for withdrawing your money, the fee will be clearly displayed on screen before you proceed.

If your account is in a currency other than euros, you may see an onscreen query about which currency you should be charged in. Always select euros. Your own bank will almost certainly have a better conversion rate than the ATM will use.

Foreign currency withdrawals attract a currency conversion loss and usually also incur a small transaction fee. You have two ways to minimise this. If you intend to live in Andorra for at least a few months, it will be worth the time and hassle of opening a local account to avoid these charges. If your stay will be relatively short, you could instead look for a credit card in your own country which gives good currency conversion and does not charge foreign currency conversion fees.

Just remember to top up your account before you withdraw any money though, as interest will be incurred on the balance outstanding from the day you withdraw the cash, and at a higher rate than purchases incur.

Banks In Andorra

Banking and finance form 20 percent of the principality’s economy, meaning it is a very important sector.

There are five banks based in Andorra. They offer checking and savings accounts, as well as insurance and loans.

Andbanc is a private bank with a presence in eleven countries.

Banc Sabadell d’Andorra is a commercial bank which was established in the principality in the year 2000.

Credit Andorra was founded in 1949. Its headquarters are located at Andorra La Vella.

The MoraBanc Group is the third largest Andorran bank when comparing total assets held.

Vall Banc was created in 2015 when the government seized control of the now defunct BPA bank before sale to US firm JC Flowers. By assets held, it is now the fourth largest bank in Andorra.

Bank branches usually open at 9am Monday to Friday, and close at 5pm each evening. However, accounts can be accessed online or by using telephone banking services, up to 24 hours a day, seven days a week.

Significant Events In The Andorran Banking Sector

It is alleged that the Andorran bank BPA was involved with money laundering, and lawsuits related to this case in both Spain and Andorra are expected to last several years. Criminal charges have been issued, whilst the previous owners have taken international legal action in an attempt to recover their lost fortunes.

Up to 26 directors and employees may have been part of the illegal activities. Essentially, it is alleged that a deposit would be made in Spain into a Banco Madrid account – the Spanish bank was a subsidiary of BPA – before funds would be transferred to Andorra into a BPA account, and then transferred to the international client abroad. This avoided exchange controls.

Action started when US treasury officials accused BPA of taking bribes to facilitate money laundering on behalf of Russian and Chinese criminal gangs, as well as on behalf of the Venezuelan state oil firm PDVSA, which was subject to US state sanctions. In response to this, the Andorran government seized control of BPA in 2015. Millions of government euros were spent on identifying the genuine and legal clients and assets of BPA, with the work undertaken by Price Waterhouse. These genuine clients were transferred across to a new bank, Vall Banc, which was sold to JC Flowers following an international tender process.

For months, the customers of BPA experienced the serious financial consequences of having their accounts frozen. Access to wages and benefits was stopped, property deposits were lost and damage was done to local businesses. This affected many people in Andorra who had no part or knowledge of the criminal activities.

This episode clearly damaged the reputation of Andorra’s banking sector, although the speed with which the government acted to resolve the situation drew international praise.

The government has also decided to take a further step to help improve the country’s reputation regarding banking secrecy. The OECD “grey list” of non-cooperative tax havens, which was part of a crackdown on tax evasion in the wake of the global financial crisis, briefly included Andorra.

However, from January 2018 onwards, information about Andorran accounts held by residents of other EU countries will be automatically shared with their home countries. This is standard international banking practice, and Andorra has signed an agreement with the EU confirming it will be implemented and maintained.

As of 2018, Standard & Poor’s rating of the Andorran banks is BBB, meaning the banks have adequate protection parameters. This reflects the end of the BPA crisis, and a settled period of the European debt crisis which affects all countries whose official currency is the euro, balanced against the lack of a central bank.

How To Open A Bank Account In Andorra

The procedures for opening a bank account in Andorra have been tightened. Bank personnel can be held responsible for allowing funds from criminal sources to be processed, and consequences include imprisonment and/or a fine. As a result, you will need to attend the branch in Andorra and bring all the correct documentation.

Before you arrive, make an appointment with the bank branch so they have the appropriate member of staff available to meet with you. You will be informed of which documentation to bring along to the appointment.

You will need to show proof of identity, evidence that you are resident in Andorra, and documents to show you are a taxpayer there. If you have been paying tax in another country, perhaps because you have only just moved to Andorra, the bank staff will need to see original and convincing proof of this.

You will also be asked about your sources of income and wealth. You must be able to show that they are legal and legitimate.

It is possible to open a non-resident account, but your options will be limited, and your financial circumstances closely examined. Your account will not be held in secrecy from your domestic tax authorities.

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