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Legal Warning

The INAF exercises the function of supervision and control of the entities operating in the financial system and it follows up the development of these entities to check on the compliance with the legal and regulatory provisions regulating their actions and it acts preventively when it detects signs of irregularities.
The INAF supervises banks, non banking companies with specialized loans, financial companies managing collective investment schemes and financial investment companies. For further information see the section Supervised entities.

The authorization scheme to create new entities operating in the Andorran financial system is governed by
Law 35/2010 of June the 3rd, of authorization scheme for the creation of new entities operating in the Andorran financial system. Authorization applications for the creation of any entity operating in the financial system must be submitted to the INAF. Resolutions and revocation of authorizations of the entities operating in the Andorran financial system, by the INAF, must be published in the Butlletí Oficial del Principat d’Andorra.

The INAF, as the authority for the Andorran financial system, exercises disciplinary power over the whole of the financial system. It may sanction slight, serious and very serious offences. The procedure prior to the imposition of a sanction is as it follows:

Beginning and examination

The INAF begins the sanctioning procedure and prepares the relevant dossier.

To this end it notifies the alleged agents and/or those responsible for the presumed offense of the opening of the dossier, it informs them thereof citing the articles which establish the relevant sanction. The INAF orders the appropriate proofs to be practiced to shed light on the facts.

The sheet of charges together with the description of the alleged facts, the reference to the legal precepts violated and the proposal for sanctions which stems from these, is notified to the persons concerned so that within an immutably fixed period of ten working days counting from the day following the notification they may answer making the allegations which they consider appropriate. If from these allegations it appears appropriate to practice complementary proofs, the result of these will be notified and the appropriate complementary allegations must be made within the following period of ten working days.

Decision on the dossier by INAF

Once the examination has been completed, the INAF decides within two months on the dossiers opened. The decision must relate with due explanation the facts and their exact juridical description, it must decide on the offense constituted by these facts and the entity, person or persons who are responsible for the offenses and it must specify the relevant sanction or declare that there is no offense or responsibility.

Sanctions on entities and individuals who are agents or responsible deriving from one and the same offense are the object of a single decision which is the result of a single procedure.

When a sanction decides on the appointment of temporary administrators, the INAF must specify in its decision the extent of their powers and actions.

The INAF notifies the entities affected of the final decision on sanctions imposed for slight, serious or very serious offenses and informs them, where appropriate, of the courses for appeal open.

Precautionary measures

Once the procedure has been begun, the INAF may, in the exercise of its disciplinary power, take the precautionary measures which it considers appropriate with the final purpose of protecting the financial system, the financial interests affected and the efficacy of the decision taken.

These measures may consists in restricting the sphere of action of entities; temporarily forbid the carrying out of certain types of operations, provide for the temporary suspension of the persons who, by the fact of holding administrative or general managerial office, by right or by fact, in entities in the financial system, appear as allegedly responsible for very serious offenses; appoint temporary administrators specifying the extent of their powers.

The time for the duration of the temporary suspension is counted from the date on which eventual sanctions of suspension take effect.

The INAF informs the government of the precautionary measures taken.

An appeal may be filed against the decision of the INAF with the Administrative Section of the Magistrates' Court within thirteen working days counting from the day following the notification.

4.- Is there a system of guarantee of cash deposits and of values deposits in the Principality?

The Law 1/2011, of 2nd February, establishes a guarantee scheme for cash deposits covered up to a maximum limit of 100,000 euros as well as another maximum limit of 100,000 euros for securities deposits covered; up to the maximum amount of the guarantee reserves formed, in the event of one of the Andorran banks being formally declared bankrupt or taken into administration for reasons of insufficient solvency and, as a consequence of this situation, it being impossible to return the cash and/or the securities deposited on the dates indicated.

The amount of 100,000 euros is established per beneficiary and per bank, and accordingly, the totality of the creditor positions that each beneficiary has with the insolvent bank must be calculated for the cash deposits covered and for the deposits of securities covered. For joint deposits, or those with more than one holder, each holder will be considered to be a “beneficiary” in accordance with what was envisaged in the deposit contract, and, failing that, in equal parts.

For further information, please see the Law 1/2011 of 2nd February for the creation of a deposit guarantee scheme for banks” at the section of this web site labeled “regulation”.

5.- How can one tell whether a entity is authorized to provide financial services?

All entities authorized to provide financial services in the Principality of Andorra must be registered with the INAF. They are all listed in the section
Supervised entities.

6.- How can I know whether the Andorran
collective investment schemes offered to me by a financial entity is properly authorized?

collective investment schemes entered in the registers of the INAF may be offered. These are all listed at this web site in the section Collective investment schemes.

7.- What steps must be taken to enable a foreign entity to distribute financial products in Andorra ?

Only entities having the relevant permit to distribute financial products in Andorra (banks, societies investment firms and agencies investment firms) may do so. These must all have the corresponding authorization and be registered in the records of the INAF. They are all listed in
the section of this web site labeled Supervised entities.

8.- Is the INAF the entity which supervises activities dealing with the laundering of money or stocks coming from international crime?

These tasks are supervised by the Andorran
Unitat d’Intel·ligència Financera(UIF). The basic law to which these activities are subject is the Law of international criminal cooperation and fight against the laundering of money or stocks coming from international crime of December the 29th 2000 and further ammendements.

Contact data:

Unitat d’Intel·ligència Financera
C/ Prat de la Creu, 8, Ed. Le Mans, despatx 402
AD500 Andorra la Vella
Telephone (+376) 806 730
Fax (+376) 828 842

9.- Does the INAF have powers relating to the tax status of the various economic players?

No. These tasks are proper to the Ministry in charge of the Finance.

10) Are fees charged to me as a client by the entity operating in the financial system correct?

Ethical and conduct standards of the financial system, in the section about information relating to clients, envisages that entities operating in the financial system must communicate clearly their fees and costs of operations and services, and a list collecting them must be available for clients. This list of fees can also be found on the website of the INAF, in the Banking Fees section.

What is meant by clients’ categorization of companies?

Companies must classify all their clients as retail clients, professional clients or eligible counterparties based on their experience, their knowledge and the skill necessary to make their own investment decisions and to properly assess the risks inherent in those decisions and the magnitude of the amounts invested. In accordance Law 8/20130, companies must notify each of their clients, the particular category in which they have been classified, as well as their right to request a different categorization and the consequences that may arise in regards to their protection.

12) Which reporting obligations do the
entities operating in the Andorran financial system have to meet their clients?

Any information that the entities operating in the financial system address to their clients, current or potential, must be transparent, fair, clear and not misleading and it must be comprehensible.

Before a retail client, current or potential, is linked to a financial investment company so that it provides him with investment and ancillary services, in order to enable him to understand the nature and risks of investment services and the kind of financial instruments which are offered to him, and in order to enable him to make investment decisions on an informed basis; this entity is obliged to provide him, with sufficient time, with appropriate information about the entity and its services, the financial instruments and the investment strategies, including guidelines and appropriate warnings about risks associated to the investment in these instruments or in connection with investment strategies, the execution centers, the expenses and the associated costs.

Entities operating in the financial system that offer investment services must request, before supplying their services, information to clients about their knowledge and experience in the investment field, in the type of product or service in question and about their financial situation and investment aims, in order to evaluate if the services are appropriate for the client and to recommend the most suitable financial instruments.

When, according to information provided by the client, the entity considers that the service or financial instrument in question is not adequate for him, it must warn him about its opinion. If the client does not supply the required information or if the information supplied by him is not sufficient, the entity must warn the client that it prevents it from establishing whether the service or financial instrument in question is suitable for him or not.

13) Who can provide with advising services?

With the standards approved in May 2010, a new entity has been included among the financial investment companies, that of the financial advisor, that can be performed by natural or legal persons authorized by the INAF to provide with advisory services exclusively in investment items (which consists in providing personalized recommendations to clients, on their request or at the initiative of the financial investment company, on one or more transactions relating to financial instruments), to advice companies on undertakings on capital structure, industrial strategy and related matters, to counsel and to provide with services relating to mergers and acquisitions of companies and reports about investment and financial analysis or other forms of general recommendations relating to transactions in financial instruments. The services that advisers can offer are limited to those above mentioned and in no case they can hold funds or securities of clients.
Law 7/2013 completes the above.

14) Can financial agents act on their own account?

The financial agents are natural and legal persons that promote and commercialize the investment and ancillary services that a financial investment company or bank can provide with, and they can also carry out, in the name and on behalf of this company, the investment services of reception and transmission of client orders in relation to one or more financial instruments, the placement of financial instruments on the base -or not- of a firm commitment and to advise on financial instruments and on investment services offered by this company.

Financial agents can only act exclusively on behalf of and under the full and unconditional responsibility of financial investment companies or banks duly authorized to provide with investment and ancillary services in territory, as far as they have been recruited by giving them sufficient power of representation to act on its name on its behalf.

Law 7/2013 completes the above.

18 / 10 / 2018

© 2018 Institut Nacional Andorrà de Finances