Law regulating the disciplinary regime of the financial system since the General Council in its session of 27 November 1997, has approved the following: law regulating the disciplinary regime of the financial system preamble the uniqueness of the financial system, and the significance of their activity in the whole of the economy of the country, has required a specific legal framework that has been developed under the protection of article 32 of the Constitution , from the law of regulation of the financial system dated 27 November 1993. The regulation of a disciplinary particularized for the financial system-in the form provided by the regulation disciplinary regulatory dated 9 January 1991-inserts on this line.

In the motivations of this law refers to the achievement of two general objectives.

The first is to stimulate the correction and the rigor in the practice of financial activity and to make sure from the respect of bank secrecy and the legitimate privacy of confidential information of the entities of the financial system-the strict compliance with the regulations aimed at reinforcing the protection of the interests of customers of financial institutions and the national economy in general.

The second objective, equally important is the protection of the financial system itself, and the rights of each of the component groups, through the appropriate mechanisms to prevent illegal actions.

For consistency and efficiency, this law provides the necessary details as to the nature of the infringements, to the establishment of the corresponding sanctions and the establishment of disciplinary procedures.

However, the will of the legislature is to give primary importance to those regulatory issues that reinforce prevention. In all fields, and in particular financial, is better, whenever possible, establish preventive measures, appropriate and respectful to the individual and collective freedoms, than to put confidence in the effectiveness of sanctions, which should only have a subsidiary character.

With regard to the preventive content, has been thought appropriate to specify the resources available to the technical authority in this area. For greater efficiency and to avoid, as much as possible, the administrative burdens and bureaucratic actions-objectives as indicated in the introduction to the law of regulation of the financial system, is a strengthening of the role of external auditors and is left as a mechanism for exceptional application control "in situ" by the technical authority.

With regard to content, the scope of legal sanctioning this law is supposed to be in the field of administrative infringements without prejudice to the validity of which are set out in the Act for the protection of bank secrecy and the prevention of money laundering of money or securities products of crime of 11 May 1995. The actions that may constitute a criminal infringement beings are classified in another legislative provision and will be educated, in the framework of the appropriate judicial procedure, the criminal jurisdiction.

The law establishes the appropriate provisions in order to discern the responsibilities that are attributable to the entities and in the people who administer.

The law establishes a sanctioning procedure that respects the rights of defence of the institutions of the financial system and the people who manage, differentiating and clearly separating the phases of the instruction, the resolution and the imposition.

With the publication of the present law, it gives fulfillment to what was established in the fourth transitional provision of law regulating deposit guarantee reserves and other operational obligations to maintain and deposited by entities operating in the financial system, dated May 11, 1995.

Chapter i. scope and field of application of the Law Article 1 scope of the law the law regulating the discipline developed two lines of measures: those that have a preventive character, and those related to administrative offences.

Article 2 Subject and authors Are authors and subjects responsible for infringements of the banks, non-banking financial institutions-specialised credit, investment and financial institutions financial institutions of various services that incur in the actions and omissions classified as an offence in this Act.

Are the subjects responsible for the infringement are those who have positions of directors or general management, in law or in fact, on the entities editors responsible for the infringement, when the violations are attributable to their fraudulent conduct or negligent.

For the purposes of the preceding paragraph, exercise positions of directors or general management, in law or in fact, administrators or members of its collegial bodies of directors or persons who exercise functions of senior management.

Chapter II. Preventive disciplinary provisions Article 3 technical Organ of the Executive financial authority the Institut Nacional Andorrà de Finances (INAF), as a technical body of the financial authority, the monitoring and control of entities in the financial system and track the evolution of these entities to check compliance with the laws and regulations that govern their actions and act preemptively in finding evidence of irregularities.

With the aim of providing greater efficiency in the prevention, the entities of the financial system will ask for the cooperation of the Institut Nacional Andorrà de Finances in the face of any circumstance in which it could be useful or convenient collaboration of financial authority.

Article 4 means of supervision and control 1. In the exercise of its functions of supervision and control, the Institut Nacional Andorrà de Finances: Apply and apply the rules and regulations in force, by means of the procedures and instrumental techniques, rules that are necessary.

Get the information that the companies of the financial system must send, occasionally or systematically, and, if necessary, by Government Office, requires the certification by external auditors of recognised prestige, also in the same forms access, when necessary, for the information of the entities by commissions on external auditors of renowned prestige.

Proceeds, exceptionally, to the inspection "in situ" of the entity, in those cases where the mechanism foreseen in the previous sections were not enough to dispel the doubts based at the Institut Nacional Andorrà de Finances on the completeness and accuracy of the information


requested, prior authorisation of the Commission of finance. In the event that the authorization was denied or not answered within 24 hours by the Superior Commission of Finances, the Institut Nacional Andorrà de Finances can ask the Government that must be delivered within a maximum of 24 hours.

Receives, for the purposes of administrative departments or services of the Administration, information concerning any irregularities committed by the institutions of the financial system.

2. Taking into account that the interventions made and the documents or reports issued by external auditors within the framework of the provisions of this law are subject to the control and supervision of the Andorran National Institute of finance, and given the importance and effectiveness that its fate should be developed, and the guarantees of the accuracy of what they should enjoy, will be considered as official documents to all intents and purposes.

3. The Institut Nacional Andorrà de Finances can apply for and obtain the legal aid you need to accomplish its functions of control and supervision.

4. The costs arising from the performance of the external auditors were in charge of the supervised entity.

Article 5 Notices in the framework of its function of monitoring and control, the Andorran National Institute of Finance address the various components of the financial system notices in connection with actions or procedures that, without involving violation, stray from the rules of good professional conduct.

Article 6 Requirements within the framework of its function of monitoring and control, the Andorran National Institute of Finance address the various components of the financial system requirements, duly motivated in relation with risky procedures that should be amended, within a period fixed in the same requirement.

Chapter III. Sanctioning procedure Article 7 technical Organ of the Executive Committee of financial authority finance, as a technical body of the financial authority, exercises disciplinary power over the whole of the financial system, resolving the sanctioning and determining the corresponding sanctions.

Article 8 initiation and instruction 1. The Institut Nacional Andorrà de Finances begins the sanctioning procedure and made the instruction of the corresponding record.

To this end, shall notify the transcript to the alleged subject authors and/or responsible for possible copyright infringement, the reports and the corresponding penalty provisions of articles explicitly.

The Institut Nacional Andorrà de Finances ordered the practice of appropriate tests for the competition of the facts.

The charges together with the exposition of the facts charged, the reference of the legal rules infringed and the proposed sanction that they arise, will notify eligible individuals so that, within the maximum period of ten working days counting from the day after the notification, may answer claiming what they deem convenient. If the argument to, it derives from the origin of complementary tests, will give knowledge of the result of these and will have to formulate the appropriate additional arguments in the ten working days subsequent.

2. The Andorran National Institute of finance, once the instruction, submit the matter to the Commission of Finance with the proposal of disciplinary actions it considers appropriate or, if so is derived from the tests were carried out, with the proposal of the file file.

Article 9 decision of the record 1. The Higher Commission of finance resolves within a period of two months from the reception of the file instructed by the Institut Nacional Andorrà de Finances. In the resolution have been set, so motivated, the facts and their exact legal qualification, the infringement is determined that these facts constitute and the entity, the person or the people who are authors and/or responsible, and specifies the corresponding sanction; or declared the non-existence of infringement or liability.

2. The sanctions on entities and to individuals who are authors and/or responsible for that derived from the same infringement are the subject of a single decision, the result of a single procedure.

3. When the penalty determined by the appointment of provisional administrators or liquidators, the Higher Commission of finance should specify in the resolution the scope of their competences and their performance.

4. the Commission of Finance submits the resolution to the Government.

Article 10 Imposition of sanctions 1. The penalties determined by the Superior Commission of finance are imposed, if the Government does not pronounce against expressly, and this is noted in the Commission of finance, within ten working days of receipt of the decision of the Commission of finance.

Non-ratification by the Government of the resolution determined by the Superior Commission of Finances, within the deadline of 10 working days before indicated, involves the Government, express delivery and motivated, which is settled the case commenced.

2. the Commission of Finance notifies the final resolution to the institutions concerned and the reports, if any, of the resource.

Article 11 Appeal can be lodged against the administrative sanctions adopted resolutions to the Administrative Section of the Court of magistrates, within thirteen working days starting from the day after the notification of the resolution.

The Court of appeal is not suspensive of execution, in accordance with the provisions of the code of administration, discretionary powers of the Administrative Section of the saved the Court of Batlles arising from the legislation in force in accordance with the same code of the Administration and concordant provisions.

Article 12 Provisional Measures 1. Once the procedure has commenced with the ultimate goal of protecting the financial system and the economic interests affected, the Institut Nacional Andorrà de Finances may propose to the Committee of Finance the precautionary measures they believe appropriate in order to ensure the effectiveness of the resolution that might fall.

2. the Commission of Finance must determine any precautionary measures within a maximum of 24 hours on the basis of the proposal of the Andorran National Institute of finance. In the case in which the Commission will not be able to gather, it is the Ministry of finance to Government delegation who determine these measures.

3. These measures may consist in: restrict the field of action of the entities; provisionally banned the carrying out of certain types of operations; have the provisional suspension of the people who, due to the fact


exercise of administrative charges or general management, in law or in fact, entities of the financial system, appear as alleged responsible for very serious offences; appoint temporary administrators by specifying the scope of its powers.

4. The duration of the temporary suspension will be counted for the purpose of compliance with any sanctions of suspension.

5. the Commission of Finance informs the Government of the provisional measures taken.

6. You can lodge an appeal against the decision of the Commission of Finance to the Administrative Section of the Court of magistrates, within thirteen working days counting from the day after the notification of the measure adopted.

The Court of appeal is not suspensive of execution, in accordance with the provisions of the code of administration, discretionary powers of the Administrative Section of the saved the Court of Batlles arising from the legislation in force in accordance with the same code of the Administration and concordant provisions.

Chapter IV. Infractions Article 13 definitions and preliminary specifications 1. Violations are liable to sanction under the terms established in this law the actions or omissions of subjects, authors and responsible, that violate legal provisions of compulsory observance.

2. These offences are subject to penalty, in administrative, in accordance with the administrative procedure established in chapter III of this law, and in a subsidiary in accordance with the application of the code of the Administration and of the regulatory Regulation of the sanctioning procedure approved by the Government on January 9, 1991.

3. The provisions of this law are to apply without prejudice to the responsibilities that may arise from the fact that incriminats are subject to criminal sanction.

When the offences committed may be constitutive of the crime, the Andorran National Institute of finance, or eventually the Superior Commission of Finances, proceed to give knowledge immediately to the Mayor of the guard.

4. In the event that the instruction to a summary, which involve a firm condemnation of the criminal jurisdiction in one of the subjects defined in paragraph 2 of article 1 of the present Law allow the concurrence of administrative violations, we will proceed to the opening of a disciplinary record.

Article 14 Qualifying infractions are classified as minor, serious and very serious, by virtue of their importance as is established in this law.

Article 15 Infractions Are very serious offences very serious infringements which affect substantially the solvency, liquidity and the stability of the entities or that violate the legitimacy of operations, the structure of the financial system, and the violations that prevent knowing the real situation of the company.

They constitute very serious violations: a) The receipt of money from the public, in the form of deposits or other funds refundable, without having the legal capacity, in accordance with article 9 of the law on regulation of the operational of the different components of the financial system, dated December 19, 1996.

b) the exercise of other specific activities reserved to each group of entities in the financial system, to articles 2, 3, 4 and 5 of the law on regulation of the operational of the different components of the financial system, by part of entities in the financial system that does not have the legal faculty.

c) the exercise of economic activities that are not characteristic of the financial system, or that are beyond your social object.

d) the breach during a period of 6 months, or more, of the rules of solvency, liquidity and concentration of risk laid down in articles 6, 11, 12, 15 and 17 of the law on regulation of solvency and liquidity criteria, dated 29 February 1996.

e) the incorporation in the assets of the investment on the part of financial institutions, investment of any game of an unauthorized nature, according to articles 12 and 13 of the law regulating the powers of the various operational components of the financial system.

f) breach of the duty to submit the annual accounts to an audit of accounts established in article 21 of the law of regulation of the financial system dated 27 November 1993.

g) refusal to provide information on the Institut Nacional Andorrà de Finances or lack of accuracy in the information provided that would prevent know certain aspects of the financial situation of the organization.

h.) the Commission of over three serious violations within a year.

Serious Offences Are serious offences article 16 the violations that affect the solvency, liquidity and the stability of the institutions, that do not involve a very serious infringement, and violations that make it difficult to know the real situation of the company.

Constitute serious violations: a) the breach of the rules in force in the area of obligatory investment ratios.

b) failure to comply with the rules in force in the area of deposit guarantee reserves and other operational obligations and, in particular, set forth in articles 3, 4, 5, 6 and 7 of the law regulating deposit guarantee reserves and other operational obligations to maintain and deposited by entities operating in the financial system, dated May 11, 1995.

c) the fact of not having the accounting in the form prescribed by law or to bring it to the knowledge of the economic situation of the company it abnormalities, patrimonial and financial matters of the organization.

d) failure to comply with the limitations of the percentages of participation of the entities of the financial system in non-financial entities set out in articles 2, 3, 4 and 5 of the law regulating the powers of the various operational components of the financial system.

e) the breach of the rules of solvency, liquidity and concentration of risk laid down in articles 6, 11, 12, 15 and 17 of the law on regulation of solvency and liquidity criteria, provided that this constitutes a very serious infringement in accordance with the provisions of the previous article.

f) the fact that leave to meet the technical specifications and professionals of the members of the Board of Directors and responsible for the management referred to in article 13 of the law of regulation of the financial system.

g) the fact that leave to meet the technical and administrative characteristics referred to in article 20 of the law of regulation of the financial system.

h.) the excuse or the resistance to provide information to the Andorran National Institute of finance, directly or by means of the external auditors, which prevent to know


certain aspects of the financial situation of the organization.

and more than three minor offences Commission) within a period of one year.

Article 17 minor Infractions Are minor violations are breaches of obligations or prohibitions set out in the legislation, which contain provisions that refer specifically to the entities mentioned in paragraph 2 of article 1 of this law, and compulsory observance to these, which do not constitute a serious violation or very serious in accordance with the provisions of the preceding two articles.

Chapter v. Article 18 Sanctions Sanctions sanctions resulting from each procedure are set in accordance with the qualification of the offences.

1. very serious offences will be penalize with: a) Comminació and fine to the entity of 25,000,001 up to 50 million euros or up to 3% of the minimum capital required in the affected entity, if the application of this percentage means an amount superior to 50 million pesetas.

b temporary or definitive Suspension) in the exercise of the responsibilities of directors or general management, in law or in fact, and/or fine of up to 6,250,001 12,500,000 pesetas to each of those who, because of exercising positions of directors or general management, in law or in fact, in these organisations, are responsible for the violation, when this is attributable to their fraudulent conduct or negligent.

c temporary or permanent Restriction) in the field of activity of the Organization and/or appointment of provisional administrator, or revocation of the authorization and subsequent appointment of liquidators.

2. serious infringements will be penalize with: a) Admonition and fine to the entity from 5,000,001 to 25 million pesetas or up to the 1.5% of the minimum capital required in the affected entity, if the application of this percentage means an amount superior to 25 million pesetas.

b) temporary suspension in the positions of directors or general management, in law or in fact, and/or fine of 1,250,001 up to 6,250,000 pesetas to each of those who, because of exercising positions of directors or general management, in law or in fact, in these organisations, are responsible for the violation, when this is attributable to their fraudulent conduct or negligent.

c) temporary Restriction of the scope of activity of the entities and/or appointment of provisional administrator.

3. minor offences will be penalize with: a) Warning and fine to the entity of 50,000 pesetas up to 5 million pesetas.

b) fine of 12,500 up to 1,250,000 pesetas to each of those who, because of exercising positions of directors or general management, in law or in fact, in these organisations, are responsible for the violation, when this is attributable to their fraudulent conduct or negligent.

4. When the profit obtained as a result of the acts or omissions on which the violation is ponderable consist, the upper limit of the fine provided for in paragraph a) of three preceding sections is extended twice referred to profit, if this figure is higher than that limit.

5. In application of points 1, 2 and 3 above, the sanctions of the various sections of each point can be imposed cumulatively.

Article 19 graduation Criteria of sanctions for the graduation of sanctions, within the limits established in the preceding article, be taken into account: the intentionality or degree of negligence that is incurred, the lack of surveillance, the gaps or inadequacies of the mechanisms of anticipation, the severity of the danger created and/or damages caused, the indirect consequences of unfavourable events for the financial system and the national economy objective, the difficulties that may be busy for not following the rules, the circumstance of having proceeded to repair the breach on its own initiative, the previous conduct of the entity in relation to the legal and regulatory standards, as well as against the requirements that have been made for previsòria, taking into account the strong sanctions that have been imposed, during the last five years.

Chapter VI. Supplementary rules Article 20 Prescription as a general rule, the offences prescribed in the three years. If there have been acts intended to disguise them to the organs of control and supervision, the prescription takes place ten years.

The period of limitation starts counting from the date on which the infringement has been committed. For infringements that occur in a continuous activity, the start date of the calculation is that of the end of the activity or the last act establishing the infringement.

The prescription is interrupted by the introduction of the corresponding sanctions.

Article 21 of the Income amount of the penalties, the amount of the penalties imposed should be admitted to the Andorran National Institute of finance, on behalf of the Government.

Article 22 Registration and advertising the sanctions imposed shall be stated in the corresponding registers, created and maintained by the Commission of finance.

The sanctions that involve the revocation of the authorization and the corresponding liquidation of the entity, or the limitation of the operational capabilities of the entities, must be published in the official bulletin of the Principality of Andorra.

First additional provision additional provisions On the exercise of the functions arising from their condition of holders of financial authority Executive, and in relation to the information which will have access to the use of the powers and the means that are evaluated in this law, the Commission of finance and the Institut Nacional Andorrà de Finances Act preserving the secrecy protected by the law on the protection of bank secrecy and the prevention of the laundering of money or securities of the crime of date may 24, 1995.

Second additional provision by the Board of Directors of the Institut Nacional Andorrà de Finances empower, among the people who are part of the Institute, those that will give faith of the events related to the instruction.

This rating is published in the official bulletin of the Principality of Andorra.

Third additional provision When the Superior Commission of Finances, exercise disciplinary power over the whole of the financial system, resolve the disciplinary and determines sanctions, any Member who is a member of any of the organs of the Andorran National Institute of finance, for more that is part of the Commission of finance, may not participate in the voting on the resolutions that based on this law, take this Commission.

Also cannot participate, and on the same terms, the banking sector's professional appointed by the Government at the proposal of the sector.

Final provisions


First final provision empowers the Government to lay down the specific rules with regard to any point in the present law that may require a regulatory development and to make it operative.

Second final provision this law comes into force the day of its publication in the official bulletin of the Principality of Andorra.

Casa de la Vall, 27 November 1997 Francesc Areny Casal Syndic General Us the co-princes the sancionem and promulguem and let's get the publication in the official bulletin of the Principality of Andorra.

Jacques Chirac Joan Marti Alanis, President of the French Republic the Bishop of Urgell Co-prince of Andorra Co-prince of Andorra