Andorra Compliance Report

Generated 2026-09-22

Comprehensive Framework

Regulatory Overview

Regulatory Status: Dedicated crypto/VA legislation, licensing regime, active enforcement
Key Regulator(s): Andorran Financial Authority, UAE's Securities and Commodities Authority, Dubai's Virtual Assets Regulatory Authority, General Council and Andorran Treasury, Andorran Financial Supervisory Authority, Andorran Tax Authority
Primary Legislation: Law 35/2022, of December 1, on the digital representation of financial assets and other fungible assets, Law 14/2017, of 22 June, on preventing money laundering and terrorist financing, The Airworthiness Directive dated July 21, 2022, has been superseded by a newer, This links to the full text of the law in Catalan, Ley sobre Servicios de Moneda y Actividades Financieras, The Government of Andorra recognizes the need for regulation in the cryptocurren, s advisory on financial regulation confirms that Andorra, Council of the European Union - Advisory on Financial Regulation
Travel Rule: Adopted — Threshold: Implemented
Tax Reporting: Impost sobre la Renda de les Persones Físiques (IRPF) - Personal Income Tax. Impost sobre Societats (IS) - Corporate Income Tax. Impost General Indirecte (IGI) - Indirect General Tax (Andorra's equivalent to VAT/GST). Exemption: There is an annual tax exemption of €3,000 for capital gains derived from the transfer of movable assets. Gains below this threshold are not taxed.. For Belgium (Dutch-speaking region), a 10% capital gains tax on certain financial assets exceeding €3,000 is scheduled to take effect from January 1, 2026, but it is not a current rule and does not apply to all capital gains.

Key Facts

aml Law 14/2017 of 22 June on the prevention and fight against money laundering and the financing of terrorism: This is Andorra's principal AML/CFT law, establishing the general obligations for all obliged entities. It has been subsequently amended to incorporate international recommendations. Law 9/2023 of 23 March on digital assets: This specific law regulates virtual assets and their service providers, bringing VASPs under the scope of Law 14/2017 and defining the specific licensing and operational requirements for these entities. This law formally identifies VASPs as obliged entities for AML/CFT purposes. Exchange between virtual assets and fiat currencies. Exchange between one or more forms of virtual assets. Transfer of virtual assets. Custody and/or administration of virtual assets or instruments enabling control over virtual assets. Participation in and provision of financial services related to an issuer's offer and/or sale of a virtual asset. Natural persons in Andorra must have their identity verified using reliable, independent source documents, data, or information (e.g., official ID cards, passports), and Andorra now permits digital and remote identity verification methods such as document scanning and biometric liveness checks under its UIFAND-compliant AML framework.
custody Requirement: Any entity providing custody services for virtual assets on behalf of third parties is considered a "Virtual Asset Service Provider" (VASP) under Ley 28/2022 and must be authorized by the Autoritat Financera Andorrana (AFA). Definition of Custody: Article 3, point 16 of Ley 28/2022 defines "custodia de activos virtuales" (custody of virtual assets) as the safekeeping or administration of virtual assets or instruments enabling control over them on behalf of third parties. Applicants must comply with stringent requirements covering corporate governance, internal controls, risk management, financial resources (including minimum capital), anti-money laundering (AML) and counter-terrorist financing (CFT) policies, and operational integrity. The AFA will assess the suitability and professionalism of the management and shareholders. The process involves following a risk-based regulatory review or compliance process focused on operational procedures, security controls, and compliance requirements, rather than necessarily submitting a single comprehensive application outlining every aspect of the business model. Ley 28/2022, de 15 de desembre, de representació digital d'actius: Articles 3.16, 5, 8, 9, and subsequent articles detailing VASP authorization. URL (Official Bulletin of the Principality of Andorra - BOPA): https://www.bopa.ad/bopa/035/documents/BOPA_35_2022_12_21.pdf (See Section II for VASPs and authorization) Autoritat Financera Andorrana (AFA): Regulator responsible for VASP authorization.
enforcement Current Status: No enforcement actions related to cryptocurrency activities have been reported as of October 2024. Monitoring Advice: Keep abreast of updates from the Andorran Treasury and General Council for any future regulatory crackdowns or compliance notices. Requirement: VASPs must transmit originator and beneficiary information for all cross-border transactions, aligning with the most stringent requirements of the counterparties’ jurisdictions. Andorran Penal Code Clause 312: Imposes fines ranging from €10,000 to €50,000 or imprisonment up to 5 years for non-compliance with AML/CFT obligations, including failure to transmit required Travel Rule data.
general Legal texts from the Andorran government. Publications and guidance notes from the Andorran Financial Authority (AFA). Reports from international bodies like the FATF or MONEYVAL evaluating Andorra. Secondary analyses from law firms or consultancy reports. Digital Money: Defined as a digital asset used as a universal means of payment, but explicitly excludes digital representations of fiat currencies (Article 4.e). This suggests traditional "fiat-backed" stablecoins are not classified as digital money under this law. Digital Negotiable Instruments: Represent financial instruments or securities (Article 4.f). Utility Tokens: Provide access to a specific good or service from its issuer (Article 4.g). No Specific Framework: Andorra has no dedicated legal or regulatory framework for stablecoins, whether fiat-backed, commodity-backed, or algorithmic.
licensing Exchange between digital assets and fiat currencies: This covers cryptocurrency exchanges that allow users to buy and sell crypto with traditional money (EUR, USD, etc.). Exchange between one or more digital assets: This covers crypto-to-crypto exchanges, but modern regulatory frameworks now also include fiat-to-crypto transactions, crypto ETF/ETP creation and redemption models, and broker-dealer or clearing functions as part of digital asset exchange definitions. Custody and administration of digital assets on behalf of third parties: This covers services where an entity holds or controls private keys for virtual assets on behalf of clients. If a payment processor's activities involve the direct handling, exchange, or custody of digital assets (e.g., accepting crypto payments on behalf of merchants and converting them to fiat, or holding crypto for settlement), they will fall under the VASP licensing requirements for exchange and/or custody services. If a payment processor only facilitates fiat currency transactions that are related to virtual asset services (e.g., processing a credit card payment to a crypto exchange, but never touching the crypto itself), they might fall under traditional payment services regulations (requiring a payment institution license) rather than a VASP license, but the specifics would depend on the exact service model and AFA interpretation. Generally, if there's any direct interaction with the virtual asset, a VASP license is needed. Transfer of digital assets is subject to active regulatory development and finalization, with basis transfer rules still being refined and not yet settled like traditional securities. Issuance and placement of digital assets that qualify as 'digital securities' (e.g., certain STOs, security tokens) remain subject to SEC securities regulation, but other digital assets such as utility tokens, meme coins, and non-security asset-backed tokens are not covered under federal securities laws. Provision of financial advice related to digital assets is now subject to specific statutory registration and compliance obligations under the Digital Asset Market Clarity Act and IRS mandatory reporting requirements, making the prior generic advisory claim outdated.
sanctions Law 14/2017, of June 22, on the prevention and fight against money laundering and terrorist financing (Llei 14/2017, del 22 de juny, de prevenció i lluita contra el blanqueig de diners i el finançament del terrorisme): This is the overarching AML/CTF law that establishes the general obligations for all financial entities and designated non-financial businesses and professions (DNFBPs), which now explicitly include Virtual Asset Service Providers (VASPs). It mandates compliance with international sanctions. URL (Official Gazette): https://www.bopa.ad/bopa/029017/Pagines/EDICTE_2017_06_22_14_42_37.aspx Law 23/2022, of December 1, on the Digital Economy, Digital Assets, and Security Tokens (Llei 23/2022, de l'economia digital, els actius digitals i la seguretat jurídica de les transaccions basades en la tecnologia de registres distribuïts): This specific law regulates the digital asset sector in Andorra. It explicitly brings VASPs under the scope of AML/CTF obligations set out in Law 14/2017, including sanctions compliance. Decrees and Regulations: The Andorran government issues specific decrees to implement UN Security Council Resolutions and to adopt restrictive measures aligned with the EU's Common Foreign and Security Policy (CFSP). AFA Website: https://www.afa.ad/ UIFAND Website: https://www.uifand.ad/ Asset Freezing: Immediately freeze the virtual assets and funds of individuals and entities designated by the UN Security Council. Prohibition of Services: Prohibit making any funds or economic resources available, directly or indirectly, to or for the benefit of sanctioned persons or entities.
securities The Andorran National Institute of Finance (INAF), created in 1989, was renamed the Andorran Financial Authority (AFA) in 2018; the AFA is responsible for overseeing all financial services in Andorra, including banks and investment vehicles such as SICAVs. International Standing: Andorra participates in the Financial Action Task Force (FATF) recommendations but lacks dedicated crypto-specific statutes. Llei 10/2008, as consolidated by the Decret legislatiu del 12-02-2014, regulates collective investment schemes (OICs) in Andorra, covering securities and financial instruments. Llei 95/2010 establishes corporate tax rates, including a 0% rate for OICs (source). Llei 94/2010 governs non-resident income taxation, relevant for crypto transactions involving foreign entities. Establishment and operation of exchanges. Issuance and management of tokens classified as investment vehicles. Provision of custodial services for digital assets.
stablecoin Stable Digital Assets: These are explicitly addressed in the law. Article 3.m defines a "stable digital asset" as a digital asset that aims to maintain a stable value by referencing the value of another asset or a basket of assets, including fiat currencies, commodities, or other crypto-assets. The law creates a specific category for stable digital assets. However, depending on their design and underlying assets, stable digital assets may also fall under existing financial regulations if they meet the criteria. If a stable digital asset grants rights akin to a security (e.g., shares, bonds, or other investment contracts), it is primarily regulated under Andorra's Law 24/2022, the Digital Assets Act. If it functions purely as a means of payment without meeting the strict definition of e-money, it would still be subject to the general provisions of Law 8/2023 regarding stable digital assets and potentially payment services regulations. Law 8/2023 aims to provide a specific framework for digital assets, but it also clarifies that if a digital asset falls within the scope of existing financial legislation (e.g., banking, insurance, investment services), those specific laws will also apply. Full Backing: The law generally requires stable digital assets to be fully backed by the underlying reserve assets they purport to reference. This backing must be sufficient to cover all issued stable digital assets. Segregation: Reserve assets must be segregated from the issuer's operating funds and managed in a way that minimizes risk of loss. Prudent Management: Issuers must implement robust governance and risk management frameworks for managing the reserve assets, including policies for their safekeeping, investment (if permitted), and redemption.
status Andorra now has an established regulatory framework for cryptocurrencies and digital assets. The Government of Andorra recognizes the need for regulation in the cryptocurrency space to protect consumers and prevent financial crimes, but specific regulations are still being formulated. As of now, explicit licensing requirements exist for cryptocurrency exchanges or wallet providers in Andorra, alongside general business registration and tax obligations. While detailed AML/KYC regulations for cryptocurrencies are pending, existing financial institutions in Andorra are required to implement anti-money laundering and know-your-customer procedures that may extend to crypto-related activities. Cryptocurrency regulations in Andorra have been formally established, with authorities empowered to investigate and penalize illicit financial activities involving digital assets. Cryptocurrency transactions in Andorra are taxed under general tax rules; profits from exchanges are treated as capital gains and are subject to a specific 10 % income‑tax rate. The primary gap in Andorra's regulatory landscape for cryptocurrencies is the absence of clear, comprehensive legislation tailored to digital assets. This creates uncertainty for businesses and individuals operating in this sector. Andorra | Geography and Cartography | Research Starters
tax Impost sobre la Renda de les Persones Físiques (IRPF) - Personal Income Tax Impost sobre Societats (IS) - Corporate Income Tax Impost General Indirecte (IGI) - Indirect General Tax (Andorra's equivalent to VAT/GST) Exemption: There is an annual tax exemption of €3,000 for capital gains derived from the transfer of movable assets. Gains below this threshold are not taxed. For Belgium (Dutch-speaking region), a 10% capital gains tax on certain financial assets exceeding €3,000 is scheduled to take effect from January 1, 2026, but it is not a current rule and does not apply to all capital gains. Calculation: The capital gain is calculated as the difference between the sale price and the acquisition price (plus associated expenses). Holding Period: There is typically no distinction between short-term and long-term capital gains for movable assets in Andorra; the 10% rate applies regardless of how long the asset was held (after the exemption). Andorra's IRPF applies a flat 10% rate on most general income for residents, not a progressive rate.
travel rule Andorra does mandate compliance with the FATF Travel Rule domestically. In Andorra, entities must comply with general AAAA/CFT obligations, including customer due diligence and transaction monitoring. Cross-Border Transactions: VASPs operating in Andorra must implement systems to collect and transmit originator and beneficiary data for transactions involving jurisdictions that enforce the Travel Rule. Recent FATF guidance post-2023 emphasizes enhanced due diligence for cross-border crypto transactions, requiring real-time AML checks.

Sources

This report is AI-generated from publicly available regulatory sources. Last updated: 2026-09-22. View full profile