ML/TF

Money laundering (ML)

It is the processing of criminal proceeds (money, securities, real estate, etc.) in order to disguise their illicit origin. Traditionally, this process involves three stages:

Placement: introduction of illicit funds within the financial system.
Layering: it is the process of disguising and separating the funds from their illicit origin through the use of complex techniques to layer the funds.
Integration: it is the reintroduction of the laundered funds in the economy, by giving them a licit appearance (i.e. mortgage agreements, investment in goods and services, insurance policy surrenders, etc.)

The persons that mainly commit the crime, as well as those who collaborate into committing the predicate offence or disguising the illicit source of funds are liable to prosecution. In addition, it is important to remember that the attempted commission, the conspiracy as well as the provocation of an offence, are also punishable acts.

Money laundering conducts and/or behaviours are largely prosecuted by all the International community, given their negative effects on local economies and their stability, revenue, reputation and security.

The Andorran Criminal Code defines money laundering as follows:

Article 409 CC “Money laundering”

Whoever converts or transmits funds that come, directly or indirectly, from any criminal activity, knowing the origin, for the purpose of concealing or disguising their illicit origin or of helping any person who has participated in the commission of the offence to evade the legal consequences of their actions, shall be punished with a prison sentence of between one and five years and a fine of up to three times its value.

Any individual who commits any conduct listed in the above paragraph with gross negligence shall be punished with imprisonment of up to one year.

The same penalties set out in paragraph 1 shall be imposed on any individual who intentionally:
- acquires, possesses, or uses funds knowing, at the time of receipt, that they are proceeds, directly or indirectly, of any of the predicate offences listed in paragraph 1.
- conceals or disguises the true nature, source, location, movement or ownership of rights with respect to funds, knowing that such funds are proceeds, directly or indirectly, of any of the predicate offences listed in paragraph

The definition of funds shall be that set out in paragraph 3 of article 366 bis of this Code.
The attempt, conspiracy and incitement to commit such a crime shall be punishable

Article 410 CC “Aggravated offence”

1. The penalty of imprisonment of three to eight years must be imposed when any of the following circumstances are met:

a) When the offence is committed by means of an organised group.

b) When the offence is committed habitually.

c) When the perpetrator of the money laundering is an obliged subject in accordance with the applicable regulations on the prevention of money laundering and the financing of terrorism, or acts within the framework of a banking or financial establishment, a real estate agency or an insurance company. In this case, the court may also impose, in addition, the penalty of disqualification from exercising the trade or post for up to six years.

d) When the funds laundered come from any crime related to illicit associations, terrorism, human trafficking, crimes against sexual freedom, illegal trafficking of toxic drugs or corruption.

2. Temptation, conspiracy and provocation are punishable

Relevant documentation

Operations that are likely to involve money laundering

Terrorist Financing (TF)

Terrorist financing implies whatever economic action, support or participation towards providing financial support to individual terrorists and/or terrorist organizations, so that they can commit acts of terror in favour of their ideology. Even if the main goal of terrorists and/or terrorist organizations is not to generate profits, these criminals need funds in order to perform their activities, which could be obtained from both licit and illicit sources, unlike the funds used in money laundering schemes.
The Andorran Criminal Code defines terrorism financing as follows:

Article 366 bis CC “Terrorist financing"

1. The person who carries out acts of terrorist financing should be punished with a punishment of imprisonment of two to eight years.

Attempt and conspiracy are punishable.

2. For the purposes of this article, financing shall be understood as any action that, by any means, directly or indirectly, unlawfully and intentionally, consists of the provision or collection of funds with the intention of using them or with the knowledge that they will be used, in whole or in part, in the Principality or abroad:

- By a terrorist group or a terrorist;

- To commit one or more terrorist acts;

- To carry out the conducts defined in article 364 of this Code.

3. For the effects of this Article, funds are understood to be the following: the financial assets, the property of any nature, tangible or intangible, movable or immovable, acquired by any means, legal or illegal, and the documents, titles or legal instruments of any form, including electronic or digital, which certify a right of ownership or an interest in such assets or property, especially but not exclusively including the bank account funds, traveller's cheques, bank cheques, payment orders, company shares, securities certificates, bonds, bills of exchange and letters of credit.

4. A punishment of imprisonment of three to ten years should be decreed in the case of any of the following circumstances:

a) When the financing is committed by means of an organized group.

b) When the subject acts regularly.

Attempt and conspiracy are punishable.

Article 364 CC “Other infringements for terrorist purposes"

1. Who, belonging, acting in the service of or cooperating with a terrorist group and for the purpose established in the first paragraph of Article 362, commits any other infringement provided in this Code, should be punished with the punishment corresponding to the act committed, in its upper half.

2. Who disseminates, by any means, an ideology or doctrine addressed to justifying the recourse to terrorism or to making a defence of groups or organizations which have practised it or which have given support to it, should be punished with a punishment of imprisonment of three months to three years.

3. Whoever travels to a territory other than that of their nationality or residence with the aim of committing, participating in, planning or preparing any act of terrorism, or contributing to committing it, or with the aim of organising, facilitating or receiving training, instruction or guidance for terrorist purposes, shall be punished with a prison sentence of two to five years.

The same penalty is applicable to anyone who, with knowledge of the terrorist aim, organises or facilitates the commission of the conduct described in the preceding paragraph in any way other than by financing it, including acts of recruitment.

Temptation is punishable.

Relevant documentation

Terrorism financing typologies
FATF report on emerging risks on terrorism financing

Main differences between ML / TF

	ML	TF
Source of funding	Illicit	Licit or illicit
Amounts of the transactions	Generally, larger amounts that are usually fragmented in order to avoid additional controls.	Generally, smaller amounts below control thresholds.
Channels	Favours formal financial systems through complex schemes that usually involve front or shell companies, bearer shares and/or off-shore jurisdictions.	Favours informal financial systems (hawala, cash couriers, etc.)
Intended use and motivations	Lucrative	Ideological
Fund traceability	Circular life cycle. The funds are reinserted in the financial system, they return towards the person that generated them or are used for future money laundering operations.	Linear life cycle. Funds are generated and then sent to the individual terrorist or terrorist organization.
Detection focus	Suspicious transactions such as deposits that are not aligned with the customer’s wealth or its expected activity.	Suspicious relationships, such as transfers of funds between seemingly unrelated parties.