31 January 2025
An Anti-Money Laundering Authority for the European Union: a New Center of Gravity in AML Enforcement
A New Center of Gravity in EU Anti-Money Laundering Enforcement: The Establishment of AMLA
Introduction to AMLA and the EU’s AML/CFT Framework
The European Union (EU) has taken a significant step forward in fighting financial crime with the establishment of the Anti-Money Laundering Authority (AMLA). This new entity represents a major milestone in the institutional framework aimed at combating money laundering and terrorist financing (AML/CFT). The creation of AMLA addresses longstanding challenges in the fragmented AML supervisory landscape within the EU, particularly those exposed by high-profile cross-border money laundering scandals involving EU banks. Historically, AML supervision has been decentralized, with national authorities responsible for enforcement in their jurisdictions. However, this model proved inadequate for multi-jurisdictional financial institutions due to ineffective coordination between national AML supervisors and Financial Intelligence Units (FIUs). To strengthen oversight and harmonize enforcement, the EU legislated for AMLA’s establishment, which will begin assuming its supervisory role in July 2025, with direct supervision starting in 2028 from its Frankfurt headquarters.
Legal and Regulatory Foundations of AMLA
AMLA operates under a newly adopted regulatory framework that marks a paradigm shift in EU AML/CFT policy. Unlike previous directives, the substantive AML rules are now governed by a directly applicable EU regulation, ensuring uniform application across Member States. This regulation is complemented by a directive covering organizational and supervisory mechanisms.
The EU’s AML/CFT legal framework combines repressive measures — criminalizing money laundering and terrorist financing — to preventive rules that require financial institutions and other obligated entities to implement due diligence procedures. These include identifying customers (Know Your Customer) and monitoring transactions (Know Your Transaction). National supervisory authorities (NSAs) have traditionally overseen compliance, but disparities in resources, supervisory approaches, and cooperation have hampered effectiveness.
AMLA’s creation addresses these weaknesses by centralizing supervision of financial institutions with significant cross-border activities and high risks, thereby fostering a more consistent and effective enforcement regime.
Responsibilities and Organization of AMLA
AMLA’s core responsibilities include direct supervision of selected cross-border credit and financial institutions with high money laundering and terrorist financing risk profiles, oversight of national supervisory authorities (NSAs), and facilitation of cooperation among FIUs. It will replace the European Banking Authority’s indirect supervisory role over AML/CFT matters.
The authority will supervise “selected obliged entities” (SOEs), which are institutions operating in multiple Member States with high residual ML/FT risk. These SOEs will be subject to direct investigations, administrative measures, sanctions, and ongoing monitoring by AMLA-led joint supervisory teams that include NSA staff for local expertise.
AMLA also holds quasi-regulatory powers, enabling it to issue technical standards, guidelines, recommendations, and harmonized supervisory methodologies. Governance is structured through two main boards: the Executive Board, managing supervisory decisions and enforcement actions, and the General Board, overseeing regulatory standards and including national representatives.
Scope of AMLA’s Supervisory Powers
AMLA’s direct supervisory mandate focuses on a limited number of financial institutions operating in at least six Member States. It selects these entities through a two-step process: first assessing inherent and residual ML/FT risks based on customer profiles, products, geographic exposure, and internal controls; then designating SOEs with high residual risk profiles.
In exceptional cases, non-SOEs may be brought under AMLA supervision either upon request by NSAs — such as when a national authority faces capacity issues or regulatory breaches — or upon AMLA’s own initiative if significant risks or compliance failures arise that could affect multiple Member States or the EU financial system.
AMLA is empowered with extensive investigative tools including on-site inspections (with limited judicial oversight), document requests, interviews, and data access. It can impose administrative measures ranging from corrective actions to restrictions on business activities or governance changes. To ensure compliance, AMLA may enforce periodic penalty payments and fines proportionate to the severity of breaches.
Furthermore, while AMLA exercises powers granted under Union law, it may also instruct NSAs to use their national powers where applicable, although distinctions between Union-based and purely national powers may create legal complexities.
Cooperation with Other EU Enforcement Bodies
AMLA will function within an already complex EU enforcement environment alongside bodies such as the European Public Prosecutor’s Office (EPPO), European Anti-Fraud Office (OLAF), Europol, and Eurojust. Cooperation agreements and information-sharing obligations are integral to ensure effective detection, investigation, and prosecution of cross-border financial crimes.
AMLA must promptly share information on suspected criminal conduct relevant to these agencies’ mandates and coordinate joint analyses among FIUs to tackle suspicious activities affecting multiple Member States. Liaison officers may be exchanged between these bodies to enhance collaboration.
This integrated approach aims to strengthen the overall EU capacity to combat sophisticated financial crime networks.
Conclusion
The creation of AMLA marks a transformative development in the EU’s fight against money laundering and terrorist financing. Through direct supervisory powers over high-risk cross-border financial institutions and harmonized regulatory standards, AMLA introduces a centralized enforcement actor previously absent from the EU landscape.
While most obligated entities remain under national supervision, AMLA’s oversight role promises more consistent application of AML/CFT rules across Member States. Its cooperation with other EU enforcement bodies further enhances the potential for coordinated action against financial crime.
Although AMLA’s direct supervision initially covers a limited subset of institutions, its establishment signals a new center of gravity in European AML enforcement that could reshape the effectiveness of efforts against cross-border money laundering.
