Standard & Poor’s has downgraded Andorra’s credit rating in the wake of US accusations that Banca Privada d’Andorra (BPA) is a “primary money laundering concern.”
The US Treasury’s Financial Crimes Enforcement Network (FinCen) said earlier this month that trade-based money laundering was central to BPA’s wholesale management of illicit funds flows, (AML Newsflow, 11 March 2015).
The ratings agency said “the risks stemming from Andorra’s financial sector have increased beyond our expectations” since FinCen started on 10 March 2015 a rule-making proposal concerning BPA, owing to the bank’s alleged money laundering activities.
One consequence of the proposal is that BPA could lose its ability to operate with US counterparties after the proposal’s 60-day comment period expires.
Standard & Poor’s assessment is that a rapid increase in non-resident assets under management by Andorran financial institutions since 2011 and a far-reaching expansion of the banks’ international footprint have significantly increased reputational and other financial risks, straining the response capacity of Andorran regulatory bodies.
The ratings agency has therefore decided to lower its long-term rating on Andorra from BBB+ to BBB, just two notches above so-called junk status.
Standard & Poors has also placed Andorra on negative credit watch.
Categories: Trade Based Financial crimes News