European microstates Andorra and San Marino are to get expanded access to the EU's single market — but their important financial sectors are to be excluded for now.

Once ratified, the "association agreement" will allow the two tiny nations a similar level of participation in the EU's single market to Norway, Iceland and Liechtenstein. They will be able to benefit from free movement of people, goods, services and capital if they follow many of the bloc’s regulations.

However, due to fears that Andorra and San Marino are too lax on policing of their financial industries, access to the bloc's financial services market won't be as comprehensive as once envisaged and will be “progressive,” according to the European Commission.

Nonetheless, the deal is “one of the most far-reaching offered by the EU to outside partners,” Commission vice-president Maroš Šefčovič said on Tuesday.

He admitted that talks over the finance elements were not “an easy chapter.” The two countries' access will depend on future audits of their national supervision of the sector. The EU’s financial supervisors will “play a central role in the auditing process,” the Commission said.

The two countries’ access to the single market for financial services was dropped from the agreement after Europe’s top regulators warned it could open the backdoor to illegal money and make it easier for predatory financial firms to target people in the EU.

The bloc's governments accused the Commission of a lack of transparency during the negotiations, with some countries pushing for finance to be fully dropped from the text.

Instead, under the "staggered approach," Andorra and San Marino "may decide not to seek access to the entire EU internal market for financial services" for up to 15 years after the agreement enters into force, the text says.

The deal has been in negotiations since 2015, and originally also included Monaco, which dropped out of talks last year.

The agreement has not yet been formally approved and still needs to be ratified by all sides, including approval by the European Parliament, which will not meet again until July after the EU election on June 6-9. San Marino will hold a general election on June 9.

In the press conference announcing the “provisional entry into force” of the deal, Šefčovič said he hoped the agreement would be signed by late fall.

Andorra’s prime minister Xavier Espot said he “cannot feel disappointed” that full access to the EU’s single market for financial services is not granted in the deal, because this is “not something that the European Commission…was able to give.”  He said the details of access for finance will be discussed in years to come.

Questions were also raised over San Marino’s relationship with Russia after an article in The Economist described the country as "alarmingly friendly" to Russia.

San Marino’s foreign minister, Luca Baccari, said the press coverage is a “pity” and argued that there is “unjustified concern” about its relationship with Russia, which he said was “normal” before the country’s invasion of Ukraine in 2022.