War in Ukraine brought out the multiple cracks and weaknesses in the western alliance for all to see – and exploit – not least the West’s rivals. With the pressure being exerted from outside, we cannot afford to overlook our vulnerabilities as we’ve done in the post-Cold War years. One such is the area of banking, finance, the threat to the dollar as reserve currency and the like. Dark money combined with bad oversight and its epiphenomena are a shadowy but ubiquitous threat that can buckle the system at any time because the system needs transparency to retain confidence and stability.
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Autor: Melik Kaylan
Publicat el: 29 de maig de 2023
War in Ukraine brought out the multiple cracks and weaknesses in the western alliance for all to see – and exploit – not least the West’s rivals. With the pressure being exerted from outside, we cannot afford to overlook our vulnerabilities as we’ve done in the post-Cold War years. One such is the area of banking, finance, the threat to the dollar as reserve currency and the like. Dark money combined with bad oversight and its epiphenomena are a shadowy but ubiquitous threat that can buckle the system at any time because the system needs transparency to retain confidence and stability.
The banks, as we all know, have shown particular weakness of late. Example: The recent news that US investors are gearing up to sue the Swiss government for the way in which it engineered a “shot gun wedding” between Switzerland’s two largest banks. The authorities’ action wiped out $17bn investment from the bank’s AT1 bondholders, damaging transatlantic trust both in Europe’s banks and in the competence of their oversight by European governments. General elections next month in another mountainous European state could serve to further erode this relationship.
Like Switzerland, the tiny Pyrenees Principality of Andorra’s has an overweight banking sector that accounts for over 20% of its GDP. It has attracted large deposits from wealthy investors from all over the world drawn by its secrecy, light touch regulation and generous tax arrangements. We’re talking about a sovereign landlocked country of some 80,000 citizens with its own laws and political institutions – but heavily associated with both France and Spain. This ‘in it’ but not ‘of it’ status in relation to Europe has allowed all manner of murky doings in Andorra’s banking sector triggering massive media scandals in recent months, and spilling over onto the upcoming elections there on Sunday.
Elections in Andorra would usually go unnoticed by the world, were it not for the fact that Andorra (along with fellow tax havens San Marino and Monaco) is currently in advanced stages of negotiations with the EU for further integration through an association agreement. Anti-corruption expert, Martin Kreutner, in a recent highly public report, likened this to allowing a “Trojan Horse” into Europe’s financial system. Kreutner’s viewpoint carries a great deal of authority as he’s the Dean Emeritus of IACA, the International Anti-Corruption Academy, an intergovernmental agency based in Austria that teaches government officials, especially EU officials, and professionals about anti-corruption measures.
How Andorra manages its outsized banking sector will be at the heart of the elections and EU negotiations. Prime Minister Xavier Espot –who is running for re-election– is accused by investors of subverting the rule of law in an alleged abuse of power aimed at protecting Andorra’s ancient banking families from the scrutiny of US law enforcement. The scandal, which has become known in the media as Andorragate, should serve as a cautionary tale for investors and policymakers alike.
In 2015, one of Andorra’s largest banks, Banca Privadad’Andorra (BPA), was forcibly nationalized by Andorran authorities following the issuance of a notice by the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), which designated BPA a foreign financial institution of primary money laundering concern. These claims were presented without evidence and never investigated by the Andorran authorities. BPA’s CEO, Joan Pau Miquel, spent two years in prison in Andorra without facing any charges. BPA’s shareholders are now pursuing a €500 million claim against the government of Andorra for the unfair and reckless takeover of the bank.
Ten years ago, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) designated Banca Privada d’Andorra (BPA) as a foreign financial institution of primary money laundering concern. The Andorran authorities acted immediately, nationalizing the bank, which at the time had €10 billion under management, resulting in millions of euros in losses for shareholders and the eradication of a thousand jobs.
However, this summary action was not as straightforward as it seemed. A year prior, US authorities had warned Andorra’s government about the potential for widespread money laundering across its banking sector generally. Andorran authorities then largely ignored the warnings, choosing not to investigate any banks.
Yet once the FinCEN notice was released, Andorran officials acted hastily and rashly, expropriating the bank without a clear investigation or due process.
Less than a year later, FinCEN withdrew its notice, stating that the bank’s dissolution meant it no longer posed a money laundering threat. Despite the withdrawal, as well as an ongoing lawsuit from the bank’s major shareholders, Andorran authorities did little to rectify or illuminate the situation. They still did not investigate the grounds for FinCEN’s allegations against BPA or, notably, any other bank.
While the story of BPA could have started and finished with murky Andorran regulators, the truth soon became far more complex—and conspiratorial – reaching deep into Spain’s upper echelons.
In the years following Bank Privada’s expropriation, evidence emerged in the Spanish media alleging that the Spanish government had specifically targeted BPA in a covert intelligence operation. In a televised interview, former Spanish National Police Commissioner José Villarejo revealed the history behind the shenanigans. He stated that the Spanish government was running an operation aimed at gathering and leaking information on pro-independence Catalan leaders, entitled “Operation Catalonia.”
As part of the mission, Spanish officials instructed Villarejo to provide information to FinCEN that would lead to the closure of BPA if the bank did not hand over information related to Catalan independence leader Jordi Pujol. Notably, while Villarejo suspected Pujol actually had assets in another Andorran bank, Andbank, the government forbade him from looking into it, given that the Spanish King held money there.
In later court testimony, Villarejo alleged that then-Spanish Prime Minister Mariano Rajoy orchestrated the operation. Following the allegations, the Andorran courts opened an investigation into Operation Catalonia, including into former Spanish Prime Minister Rajoy, which remains ongoing. Here’s the core story in one sentence: The plaintiffs allege that “Rajoy used and brandished the false financial information sent to FinCEN to intimidate or influence the Andorran authorities into intervening and liquidating BPA, since otherwise the entire Andorran banking sector would be affected and frozen.”
To reiterate, Andorran bank BPA was made a scapegoat by Andorran authorities in order to cover up the widespread corruption in the Andorra’s banking system. Meanwhile, in Spain, the case against BPA had been crumbling for years. From 2017 to 2019, multiple court cases either dismissed or found BPA, which had a subsidiary in Madrid, not guilty of the charges, including money laundering.
Despite mounting evidence from Spain in favor of BPA, the Andorran government ultimately chose to pursue criminal charges against BPA officials. In July 2025, the court sentenced 18 executives to lengthy jail terms, including a seven-year prison term and a €30 million fine for the bank’s former CEO.
All this while some clients cited in BPA’s case, such as Chinese businessman Gao Ping, have never been convicted. In Spain, the related Emperador case involving Chinese organized crime https://english.elpais.com/elpais/2017/08/29/inenglish/1503994293_296073.html has languished for more than a decade without trial. Yet, in the case of BPA, Andorran courts unceremoniously found the BPA executives guilty, handing down disproportionate punishments. The defendants are now appealing the sentences.
BPA shareholders argue that Andorra’s lack of due process and failure to investigate any other banks—coupled with alleged Spanish pressure via Operation Catalonia—suggests the Andorran government may have used BPA as a scapegoat to protect more politically connected banks.
For example, Andbank, which held the Spanish King’s funds, was also found to have facilitated international money laundering and tax evasion through a subsidiary firm, according to revelations https://english.elpais.com/usa/2021-10-05/afsi-the-obscure-andorran-firm-that-handled-hundreds-of-offshore-companies-for-its-clients.html in the famous Pandora Papers (which also gave details of Zelensky’s holdings). Much of this scandal has appeared in in El Pais, a leading Spanish newspaper. Also, not a minor detail, Andorra’s first prime minister, a member of the politically influential Reig family, later served as the president of Andbank.
In early December, BPA’s shareholders requested information about what Andorran officials knew in the lead-up to FinCEN’s notice. In their request, they stated this transparency is “a necessary condition to restore institutional, financial and judicial trust” in Andorran institutions.
The Andorran leadership is now at a crossroads. With a new U.S. administration—and likely soon, a new U.S. Ambassador to Spain and Andorra—they have an opportunity to course correct. This could be a wise and good-faith strategic move to mitigate concerns from the Trump administration about Andorra misleading the US FinCEN for its own benefit.
Given the growing mountain of evidence exonerating BPA, some in Andorra are calling for Andorran authorities to bring closure to the BPA case through the passage of a fair amnesty law for those convicted. This action would restore Andorra’s credibility regarding the lack of due process in BPA’s expropriation; send a message to Spain that Andorra’s sovereignty shall not be infringed; and make clear that the United States’ regulatory power cannot be manipulated for political gain.
Andorra should take the US’s 2014 warning about money laundering and open investigations into its banking sector seriously—regardless of the banks’ political affiliations. These actions would send a clear signal that Andorra abides by the rule of law and is willing to work cooperatively with good-faith international partners.
For the Catalan leader Pujol, his trial is just beginning. But for BPA and its employees, the damage was swift and lasting—and now it’s time to make it right.