Principality of Andorra Rating Lowered To 'BBB' And Placed On CreditWatch Negative

OVERVIEW The risks stemming from Andorra's financial sector have increased beyond our expectations following the U.S. Department of the Treasury's Financial Crimes Enforcement Network's (FinCEN) announcement on March 10, 2015, starting a rule-making proposal concerning Banca Privada d'Andorra (BPA), owing to the bank's alleged money laundering activities. BPA could consequently lose its ability to operate with U.S. counterparties after the proposal's 60-day comment period expires. In our assessment, a rapid increase in nonresident 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. We are therefore lowering our long-term rating on Andorra to 'BBB' from 'BBB+'

...OVERVIEW + The risks stemming from Andorra's financial sector have increased beyond our expectations following the U.S. Department of the Treasury's Financial Crimes Enforcement Network's (FinCEN) announcement on March 10, 2015, starting a rule-making proposal concerning Banca Privada d'Andorra (BPA), owing to the bank's alleged money laundering activities. + BPA could consequently lose its ability to operate with U.S. counterparties after the proposal's 60-day comment period expires. + In our assessment, a rapid increase in nonresident 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. + We are therefore lowering our long-term rating on Andorra to '###' from '###+' and placing our '###/A-2' long- and short-term ratings on CreditWatch negative. + The CreditWatch reflects the...

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