MADRID (AP) — Andorra's credit rating was downgraded Friday by Standard & Poor's following U.S. accusations that one of its five banks laundered money for groups from China, Russia and Venezuela.
S&P said in a statement it lowered the country's rating from BBB+ to BBB, which is two notches above so-called junk status.
It also placed Andorra, which is wedged between Spain and France in the Pyrenees mountains, on negative credit watch. That means another downgrade is possible.
The downgrade came four days after Banca Privada d'Andorra was deemed a "primary money-laundering concern" by the U.S. Treasury Department, which puts it at risk of being shut out of the U.S. financial system.
S&P noted uncertainty about BPA and "possible consequences on the rest of the country's banking system and the government's medium-term fiscal position."
Andorra suspended BPA's board on Thursday along with three members of its management team after taking the bank and appointing three provisional administrators "to preserve the stability of the entity and its operations," the country's financial supervisory agency said.
Spain and Panama also took over BPA's units in those countries, and the bank's Spanish board of directors resigned.
Andorra's financial agency said Friday night in a statement that BPA transactions have been delayed in recent days because of a government effort to prevent more money laundering.
The value of the delayed transactions was not disclosed but the agency said transactions for affected clients would be processed by Monday.
The Treasury Department said BPA managers helped launder money, including $2 billion allegedly siphoned from the Venezuelan state oil company, Petroleos de Venezuela SA.
It also said one unnamed high-level BPA manager accepted "exorbitant commissions" to develop shell companies that helped launder the Venezuelan company's money.
Two other BPA managers, again unnamed, were also said to have helped two Russian and Chinese men — arrested before the Treasury Department notice — to launder money. Money laundering was also said to have been performed for "numerous" Spanish business owners.
Andorra has a population of 85,000 and is known as a destination for skiing, shopping and banking.