Rules and guidance

This section contains information regarding the text of the legal provisions, regulations and technical communiqués, as well as the general guidelines adopted in the Principality of Andorra within the field of prudential standards applicable to banking entities and investment firms.

Transposition and implementation of Directive 2013/36/EU and Regulation 575/2013 have been mainly carried out with the incorporation into the Andorran legal framework of:

1. Law 35/2018, of 20 December, on solvency, liquidity and the prudential supervision of banking entities and investment firms (Law 35/2018), which was published in the Official Gazette of the Principality of Andorra (BOPA) on 23 January 2019 and which represents a significant leap with respect to the Law regulating the criteria of solvency and liquidity for financial bodies of 29 February 1996.

Nevertheless, it has also meant the modification -through final provisions of Law 35/2018- of the current legal framework as detailed below:

2. Regulation implementing Law 35/2018, of 20 December, on solvency, liquidity and the prudential supervision of banking entities and investment firms, which was approved by the Government on 6 March 2019.

3. Regulations concerning the adoption of European Union technical standards applicable in matters of solvency, liquidity and prudential supervision of banking entities and investment firms;  two regulations have been approved, on 3 April 2019 and 3 November 2021, by which various technical regulations issued by the European Commission are incorporated into the Andorran legal framework. Specifically, the following European regulatory technical standards:

Regulatory Technical Standards

4. Communiqué no. 255/19 Periodic information requirements, that repeals the AFA’s technical Communiqué no. 254/18, which established the reporting of periodic information to be sent to the AFA from 30 September 2018. This communiqué incorporates into the Andorran legal framework part of the Commission Implementing Regulation (EU) No 680/2014 of 16 April 2014 laying down implementing technical standards with regard to supervisory reporting of institutions according to Regulation (EU) No 575/2013 of the European Parliament and of the Council.

5. Supervisory Guidance relating to the Internal Capital Self-Assessment Processes (ICAP) and of Liquidity (ILAP) of the Banking Entities (Technical Communiqué no. 263/20-EB)

Section 1 of article 73 of CRD IV, transposed into Andorran legislation in article 15 of Law 35/2018, states that “entities and their consolidable groups must have sound, effective and comprehensive strategies and procedures, to constantly assess and maintain the inflows, types and distribution of internal capital that they consider appropriate for covering the nature and the level of risks to which they are or may be exposed.”.

Likewise, section 1 of article 86 of CRD IV, transposed into Andorran legislation in article 25 of Law 35/2018, states that “entities must have sound strategies, policies, procedures and systems to identify, measure, manage and supervise liquidity risk over an appropriate set of time horizons, including intraday, to ensure that entities maintain an adequate level of liquidity buffers.”.

In this sense, the AFA has published the aforementioned Guide with the purpose of facilitating to banking entities the application of the capital and liquidity self-assessment processes established by the aforementioned articles 15 and 25 of Law 35/2018.