Our Mission & Functions

Mission

The AFA´s mission has the following objectives:

  • To promote and ensure the smooth running of the Andorran financial, insurance and reinsurance systems;
  • To ensure the safeguarding, stability and reputation of the Andorran financial, insurance and reinsurance systems, and to promote confidence in said systems;
  • To ensure adequate protection for consumers and investors;
  • To promote the competitiveness of Andorra's financial, insurance and reinsurance systems both nationally and internationally;
  • To ensure transparency and promote the orderly development of the insurance and reinsurance systems as well as to protect the rights of policyholders, insured persons and beneficiaries;
  • To help reduce systemic risk derived from the instability of the markets in which the operating entities of the Andorran financial system operate, as well as to help reduce systemic risk arising from credit events of the operating entities in the financial system and/or their counterparts;
  • To carry out the necessary actions that the exercise of its functions requires.

 

Functions

The following are some examples of the functions carried out by the AFA, but by no means are they the only functions that we undertake:

  • We issue, among others, technical communiqués, communications and/or recommendations in order to develop regulations and technical instrumental norms regarding the exercise of banking activities, the activities of operating entities in the financial system and any other activity, when required by law. Thus, the AFA may issue:
    • Technical Communiqué: any mandatory norm/regulation that may affect supervised entities.
    • Communications and/or recommendations: specific information requests or any other communication that the Authority considers relevant to any of the supervised entities, or their sub-groups.

The Technical Communiqués are published in the Regulations section of the AFA´s website, while the Communications are exclusively published in the Virtual Office - Private area section of the AFA´s website, which is accessible for affected entities, depending on the type of Communication issued.

Additionally, the AFA may demand requests for specific information from supervised entities individually, by means of a letter addressed directly to said entities.

In carrying out this function, the AFA may submit the relevant regulatory proposals to the financial sector agents and will always consider the following factors:

  • That the costs executing the regulation be proportionate to the benefits of its implementation;
  • The international standards in the matter;
  • The impact of its implementation on the competition, the capacity for innovation and the international competitiveness of the Andorran financial market.
  • We act as a competent supervisory authority over all supervised entities and over natural or legal persons outside the financial system that are, or may be, subject to the supervision of the AFA, in accordance with current legislation for the purpose of ensuring compliance with the regulations applicable to said persons.
  • We supervise, on a consolidated basis, operating entities in the financial system and as a consequence, the groups of financial entities operating in said system, understood as all those groups of companies in which the parent company is an operating entity in the financial system, or whose main activity is the holding of shares in one or more operating entity of the financial system, as well as those groups which include one or more operating entities in the financial system whose activity is the groups most important holding.
  • We exercise disciplinary and sanctioning powers over supervised entities and over all natural or legal persons outside the financial system that the current legislation states are competence of the AFA.
  • We exercise control and supervisory powers in the insurance and reinsurance systems, where the criteria are those that are mandated in articles 8 to 12 of Law 12/2017, June 22nd on the governing and monitoring of insurance and reinsurance in the Principality of Andorra. [Llei 12/2017, del 22 de juny, d’ordenació i supervisió d’assegurances i reassegurances del Principat d’Andorra]
  • We examine and complete any application submitted to the AFA in order to obtain a license or authorization to operate in the Andorran financial system, in accordance with current legislation and we keep the corresponding AFA registers updated.
  • We examine and complete applications for authorization and/or registration of administrative acts in accordance with current legislation and we keep the corresponding AFA registers updated.
  • We deal with and manage consumer complaints presented to the AFA by supervised entities.

When the analysis of a complaint demonstrates a prudential supervision problem, which may go beyond the individual consumers complaint, the AFA may carry out specific controls within the supervision framework.

The actions carried out by the AFA within the framework of prudential supervision cannot be shared with the consumer.

The reports issued by the AFA regarding complaints made by consumers of supervised entities are not decisive in relation to the contractual responsibilities between the client and the entity, this matter is reserved for the courts.

  • We perform the tasks associated with the international representation of Andorra regarding specific issues that affect the financial sector.
  • As a member of the Executive Committee of the FAGADI and of the Executive Committee of the SAGI, a representative of the AFA will holds the presidency and the AFA assure the functions that have been attributed to this Authority by the provisions of the Law 20/2018 of 13 september governing the Andorran Deposit Guarantee Fund and the Andorran Investor Compensation Scheme.
  • Provide State treasury services and carry out the financial management of public debt issued by the Principality of Andorra, after having obtained approval from the Government.
  • Collect the deposits and guarantees established in current legislation and court decisions, and manage these funds in accordance with the principle of prudence in an appropriate manner. In the carrying out of this function, the AFA carries out other functions:
  • Several functions that the AFA carries out:
    • Tax collection on behalf of the Justice Administration
    • The collection of court fees, fines and other concepts on behalf of the Justice Administration carried out by the AFA, is transferred in full to the Government once a year and includes the following concepts:
      • The collection of court fees: as established in the Judicial Tax Law of December 20th 1995 [Llei de taxes judicials del 20 de desembre del 1995], the AFA receives from the Government the stamps intended for the payment of fees for the actions and procedures under the civil jurisdiction in general, contentious and voluntary, and the administrative jurisdiction after which they are delivered to the Bar Association of Andorra. The latter assembles the quarterly economic value and settles the court fees accrued during the period with the AFA;
      • The collection of fines, photocopies and fees recovered from the Justice Administration’s provision of external services.
  • Justice Administration Funds Management

The AFA is responsible on the one hand, for receiving revenues and making payments on behalf of the Justice Administration based on the orders received, and on the other hand, for investing said funds deposited by the Justice Administration in the AFA, based on availability in order to maximise the return and always respecting the principle of prudence. The performance of these investments is conditioned by the need to generally maintain high availability, which is determined by the necessities of every day payments that the AFA receives from the Justice Administration and that require maintenance, for the most part, in short-term investments.

  • Management of residency deposits

The AFA is in charge of managing the deposits that must be met in order to obtain residence permits, both for residents with independent means, as well as for professionals with an international projection or for residence permits for reasons of scientific interest, culture and sport, under current legislation in the matter.

Specifically, the amount to be deposited with the AFA for new non-lucrative residence permits (hereafter, passive residences) is regulated by the Law 9/2012 of 31st May, amending the qualified law on immigration [Llei 9/2012 del 31 de maig, de modificació de la Llei qualificada d’immigració], Articles 96, 99 and 101. €50,000 must be placed in non-interest bearing deposits for the main permit holder and a further €10,000 for each dependent. In cases of termination, cancellation or lack of renewal of said permits, the deposits are returned, with the reservation of deductions that may occur due to non-compliance with Administration obligations.

The procedure for settling the amounts deposited is set out in article 12 of the Regulation of immigration permits of residence without work [Reglament de les autoritzacions d’immigració de residència sense treball], approved by the Government of Andorra on July 18th 2012.

  • Management of Guaranteed Deposit Reserves

The AFA is in charge of the management of Guaranteed Deposit reserves for non-bank financial entities, applying the Law regulating Guaranteed Deposit reserves and other operational obligations that operating entities must maintain and deposit in the financial system, 11th May 1995.

The remuneration of Guaranteed Deposits constituted by financial investment entities, and management companies of collective investment entities that are part of the financial system, is established annually by decree. These deposits are paid on 31st of December of each year, taking into account the 12-month Euribor and according to the respective decrees that are published in the Official Bulletin of the Principality of Andorra (BOPA) every year. In cases where the Euribor has been negative, the deposits are not remunerated.

The fourth transitory provision of Law 35/2018, of December 20, of solvency, liquidity and prudential supervision of banking entities and investment companies, establishes that the financial system operating entities that hold a deposit in the AFA in compliance with the Law regulating Guaranteed Deposit reserves and other operational obligations that operating entities must maintain and deposit in the financial system, 11th May 1995, have to present to the AFA the corresponding  request asking for the return of its deposit.

  • Management of deposits preceding the creation of financial entities

The AFA is in charge of the management of deposits constituted by natural or legal persons, preceding the creation of an operating entity in the Andorran financial system. In compliance with the provisions of article 8 "Pre-deposit" of the Law 35/2010 of the 3rd June, on the authorization scheme for the creation of new bodies operating in the Andorran financial system [Llei 35/2010, del 3 de juny, de règim d’autorització per a la creació de noves entitats operatives del sistema financer andorrà] modified by Law 10/2013 [Llei 10/2013], any one that wishes to create an operating entity in the Andorran financial system must create, before presenting the authorization request for the creation of the entity in question, a non-remunerated deposit at the AFA for the amount established in said article, based on the type of entity that they wish to establish.

  • Management of deposits of freelance professions

By virtue of Law 10/2018 [Llei 10/2018] of May 17th, described as modification of Law 9/2012 of May 31st [Llei 9/2012, del 31 de maig] on the modification of Immigration Law [Llei qualificada d’immigració] and according to Article 23.12, any foreigner wishing to reside in the Principality of Andorra and carry out a self-employed activity can obtain a residence and self-employment immigration permit.

In order to make this request effective, at the same time that the application for the immigration permit is presented, said person must deposit fifteen thousand euros (15,000 euros) with the AFA in an unremunerated deposit. In cases of termination, cancellation or lack of renewal of said permits, the deposits are returned with the reservation of deductions that may occur due to non-compliance with the Principality of Andorra´s obligations.

In the event that the Andorran society constituted by virtue of which the immigration permit requested has been granted, with the purpose of carrying out a selected business project by one of the entities previously recognized by the Government to this effect, it is not necessary for the holder of the aforementioned permit to materialise the deposits the amount referred to in the preceding paragraph.

The management of these deposits is the responsibility of the AFA.

  • We issue, at the Government´s request, reports and legislation regarding the financial system and on other matters of the AFA´s competency, as well as proposing measures that can improve the order and regulation of the financial system;
  • We advise the Government on issues related to economic and financial policy at the request of persons at the Ministry of Finance, such as:
    • A member of the Andorran Delegation to the Joint Committee of the Monetary Agreement
    • A member of Negotiation Delegations in different areas, with the European Union

In relation to:

    • Rating Agencies (both sovereign and entities);
    • Cooperation with the Government of Andorra´s Statistics Department;
    • Timely advice in the preparation of preliminary non-binding draft legislation linked to the financial system;
    • Receiving and resolving national and foreign consultations in relation to the legal framework applicable to the Andorran financial system;
    • Developing studies and statistics regarding the financial system and in all those matters of the AFA´s competence, in accordance with current legislation;
    • Creation and publication of the AFA´s Annual Activity Report;
    • Collaboration with the Taxation and Borders Department of the Ministry of Finance, in relation to the application and verification of the accounting and settlement of taxes that affect operating entities in the Andorran financial systems (EOSF);
    • Collaboration with the Companies Registry, by providing guidance on the applications for the constitution or modification of companies that have doubts about whether or not they belong to and/or adjust to the financial system;
    • Issuing of a report regarding the direct investments, referred to in section 4 of article 10 of Law 10/2012 of June 21st, Foreign Investment in the Principality of Andorra [Llei 10/2012, del 21 de juny, d’Inversió estrangera al Principat d’Andorra] for those who wish to create foreign credit or financial institutions, so that the Ministry responsible for foreign investment will be able take it into consideration before deciding;
    • Issuing of a report prior to the granting of licenses, in accordance with Law 37/2014 of December 11, Regulation of gambling [Llei 37/2014, de l’11 de desembre, de Regulació dels jocs d'atzar] which establishes that, for the granting of licenses, the gambling regulatory entity must require binding reports from the Financial Intelligence Unit of Andorra (UIFAND), the AFA, the Andorran Agency of Data Protection and/or Andorra Telecom, SAU, as applicable;
    • According to Law 6/2015 of January 15th, on the Pension Fund for Retirement [Llei 6/2015, del 15 de gener, del Fons de reserva de jubilació], the board is made up of five members, among which one is a member of the General Directorate of the AFA, appointed by its Board of Directors;
    • To act as a competent supervisory authority over natural or legal persons outside the financial system within the framework of the carrying out of functions attributed to it in accordance with current legislation, among others:
      • in the field of market abuse (Law 8/2013) [Llei 8/2013];
      • regarding euro coins and banknotes not suitable for circulation.

To this end, the National Analysis Centre (CNA) and the National  Currency Analysis Centre (CNAM) are the competent authorities that implement the technical standards necessary for the effectiveness of compliance with Law 17/2013 of  October 10th, on the introduction of the euro in Monetary Agreement framework signed between the Principality of Andorra and the European Union [Llei 17/2013, del 10 d’octubre, sobre la introducció de l’euro en el marc de l’Acord Monetari signat entre el Principat d’Andorra i la Unió Europea].

According to Law 28/2017 on the 2018-2021 Statistics plan [Llei 28/2017, del Pla d’estadística 2018-2021], it is established that the Andorran Statistics Council be made up of fifteen members, one of which must belong to the AFA.