While corruption in Andorra is not as widespread as in the cases of other countries, key issues remain in the principality. These include corrupt practices related to financial regulations and Andorra's financial system. Due to the Andorran banking secrecy law, the country became an attractive destination for illicit funds, fraud, and money laundering.
Incidences of corruption in Andorra are largely identified with the country's bank secrecy law. Individuals, companies, and organizations committing financial crimes use Andorran banks to evade taxes, hide money from other countries, and bypass internal law. [1] Private actors have been found to be complicit in illicit financial activities such as the money laundering of illegal proceeds of international mafia operations as well as ill-gotten wealth of individuals and criminal groups. This is demonstrated in the case of a criminal network composed of former high-ranking Venezuelan officials who served under President Hugo Chavez. The group is being investigated for stealing more than $2.2 billion in public funds. In May 2023, Andorra froze more than $55 million in alleged bribes that were collected and stashed in the country by 21 members of the criminal network. [2]
Andorra's membership in the European Union does not guarantee a requirement to adhere to certain conventions that would have restricted an environment for fraud and corruption. For instance, the country is not obligated to join the EU's customs territory. [3] This contributed to the existence of organized crimes in the country that commit money laundering, smuggling, fraud, and economic crimes. However, the number of these activities is of limited scale and criminal groups rarely use corruption or bribery to co-opt civil servants or law enforcement officials. [4]
The country's judiciary is generally seen as independent and free from external pressures including the government. However, there are calls for more participation of judges and magistrates in the selection of the Andorran Higher Council of Justice, which is composed of judges selected by the two co-princes, the speaker of the parliament, and the prime minister. According to the Council of Europe’s Group of States Against Corruption (GRECO), this system exposes these high-level officials to potential conflicts of interest – that they are more inclined to rule in favor of those political figures who appointed them. [5] [6]
Presently, corruption in Andorra is not of significant concern and this has been achieved through a number of initiatives. These include financial sector reforms, which aimed at combatting abuses of the country's banking system, particularly those that could support domestic and transnational corruption. [7] For instance, in 2019, the parliament passed a law that provided safeguards against money laundering and terrorist financing. [7] This has been confirmed by international institutions such as GRECO which stated that Andorra has made progress in preventing corruption, particularly, according to its recommendations. GRECO, however, noted that the country still needs reforms in key areas such as integrity checks for appointed officials and the regulation of special relationship personnel. Both of these are seen to aggravate risks of conflicts of interest. [4]
Money laundering is the process of illegally concealing the origin of money obtained from illicit activities such as drug trafficking, underground sex work, terrorism, corruption, embezzlement, and gambling, and converting the funds into a seemingly legitimate source, usually through a front organization.
Organized crime is a category of transnational, national, or local group of centralized enterprises run to engage in illegal activity, most commonly for profit. While organized crime is generally thought of as a form of illegal business, some criminal organizations, such as terrorist groups, rebel forces, and separatists, are politically motivated. Many criminal organizations rely on fear or terror to achieve their goals or aims as well as to maintain control within the organization and may adopt tactics commonly used by authoritarian regimes to maintain power. Some forms of organized crime simply exist to cater towards demand of illegal goods in a state or to facilitate trade of goods and services that may have been banned by a state. Sometimes, criminal organizations force people to do business with them, such as when a gang extorts protection money from shopkeepers. Street gangs may often be deemed organized crime groups or, under stricter definitions of organized crime, may become disciplined enough to be considered organized. A criminal organization can also be referred to as an outfit, a gang, crime family, mafia, mob, (crime) ring, or syndicate; the network, subculture, and community of criminals involved in organized crime may be referred to as the underworld or gangland. Sociologists sometimes specifically distinguish a "mafia" as a type of organized crime group that specializes in the supply of extra-legal protection and quasi-law enforcement. Academic studies of the original "Mafia", the Italian Mafia, as well as its American counterpart, generated an economic study of organized crime groups and exerted great influence on studies of the Russian mafia, the Chinese triads, the Hong Kong triads, and the Japanese yakuza.
Political corruption is the use of powers by government officials or their network contacts for illegitimate private gain.
Kleptocracy, also referred to as thievocracy, is a government whose corrupt leaders (kleptocrats) use political power to expropriate the wealth of the people and land they govern, typically by embezzling or misappropriating government funds at the expense of the wider population. One feature of political-based socioeconomic thievery is that there is often no public announcement explaining or apologizing for misappropriations, nor any legal charges or punishment levied against the offenders.
The Bank Secrecy Act of 1970 (BSA), also known as the Currency and Foreign Transactions Reporting Act, is a U.S. law requiring financial institutions in the United States to assist U.S. government agencies in detecting and preventing money laundering. Specifically, the act requires financial institutions to keep records of cash purchases of negotiable instruments, file reports if the daily aggregate exceeds $10,000, and report suspicious activity that may signify money laundering, tax evasion, or other criminal activities.
Banking in Switzerland dates to the early 18th century through Switzerland's merchant trade and over the centuries has grown into a complex and regulated international industry. Banking is seen as emblematic of Switzerland and the country has been one of the largest offshore financial centers and tax havens in the world since the mid-20th century, with a long history of banking secrecy and client confidentiality reaching back to the early 1700s. Starting as a way to protect wealthy European banking interests, Swiss banking secrecy was codified in 1934 with the passage of a landmark federal law, the Federal Act on Banks and Savings Banks. These laws were used to protect assets of persons being persecuted by Nazi authorities but have also been used by people and institutions seeking to illegally evade taxes, hide assets, or to commit other financial crime.
An offshore bank is a bank that is operated and regulated under international banking license, which usually prohibits the bank from establishing any business activities in the jurisdiction of establishment. Due to less regulation and transparency, accounts with offshore banks were often used to hide undeclared income. Since the 1980s, jurisdictions that provide financial services to nonresidents on a big scale can be referred to as offshore financial centres. OFCs often also levy little or no corporation tax and/or personal income and high direct taxes such as duty, making the cost of living high.
Anti-Money Laundering (AML) refers to a set of policies and practices to ensure that financial institutions and other regulated entities prevent, detect, and report financial crime and especially money laundering activities. Anti-Money Laundering is often paired with the action against terrorism financing, or Combating the Financing of Terrorism, using the acronym AML-CFT. In addition arrangements intended to ensure that banks and other relevant firms duly report suspicious transactions, the AML policy framework includes financial intelligence units and relevant law enforcement operations.
Transnational organized crime (TOC) is organized crime coordinated across national borders, involving groups or markets of individuals working in more than one country to plan and execute illegal business ventures. In order to achieve their goals, these criminal groups use systematic violence and corruption. Common transnational organized crimes include conveying drugs, conveying arms, trafficking for sex, toxic waste disposal, materials theft and poaching.
The chief compliance officer (CCO) is a corporate executive within the C-suite responsible for overseeing and managing regulatory compliance issues within an organization. The CCO typically reports to the chief executive officer or the chief legal officer.
Internal Revenue Service, Criminal Investigation (IRS-CI) is the United States federal law enforcement agency responsible for investigating potential criminal violations of the U.S. Internal Revenue Code and related financial crimes, such as money laundering, currency transaction violations, tax-related identity theft fraud and terrorist financing that adversely affect tax administration. While other federal agencies also have investigative jurisdiction for money laundering and some Bank Secrecy Act violations, IRS-CI is the only federal agency that can investigate potential criminal violations of the Internal Revenue Code, in a manner intended to foster confidence in the tax system and deter violations of tax law. Criminal Investigation is a division of the Internal Revenue Service, which in turn is a bureau within the United States Department of the Treasury.
Financial crime is crime committed against property, involving the unlawful conversion of the ownership of property to one's own personal use and benefit. Financial crimes may involve fraud ; theft; scams or confidence tricks; tax evasion; bribery; sedition; embezzlement; identity theft; money laundering; and forgery and counterfeiting, including the production of counterfeit money and consumer goods.
Crime in Switzerland is combated mainly by cantonal police. The Federal Office of Police investigates organised crime, money laundering and terrorism.
Raymond W. Baker is an American businessman, scholar, author, and "authority on financial crime." He is the founder and president of Global Financial Integrity, a research and advocacy organization in Washington, DC working to curtail illicit financial flows.
International asset recovery is any effort by governments to repatriate the proceeds of corruption hidden in foreign jurisdictions. Such assets may include monies in bank accounts, real estate, vehicles, arts and artifacts, and precious metals. As defined under the United Nations Convention against Corruption, asset recovery refers to recovering the proceeds of corruption, rather than broader terms such as asset confiscation or asset forfeiture which refer to recovering the proceeds or instrumentalities of crime in general.
Corruption in Lithuania describes the prevention and occurrence of corruption in Lithuania.
Corruption in Switzerland describes the prevention and occurrence of corruption in Switzerland.
Anti-corruption comprises activities that oppose or inhibit corruption. Just as corruption takes many forms, anti-corruption efforts vary in scope and in strategy. A general distinction between preventive and reactive measures is sometimes drawn. In such framework, investigative authorities and their attempts to unveil corrupt practices would be considered reactive, while education on the negative impact of corruption, or firm-internal compliance programs are classified as the former.
Suisse Secrets was a February 2022 leak of details of more than CHF 100 billion held in nominee accounts linked to over 30,000 clients of Credit Suisse, the largest ever leak from a major Swiss bank. It revealed that autocrats, oligarchs, war criminals, human traffickers and drug dealers had accounts with Credit Suisse, a failure of the bank to apply due diligence. Swiss media was disallowed from publishing any investigatory work due to strict banking secrecy laws, which brought up their collective concern that such laws run contrary to freedom of the press.
Corruption in Liechtenstein has been described as relatively low compared to other nations. This has been achieved by the small European principality through a strong and stringent legal framework and effective implementation mechanisms.
