It’s already more than two years ago that the EU Commission has announced that there will be a new sheriff in town: On 20 July 2021, the EU Commission presented its legislative package to strengthen the EU’s rules on anti-money laundering and countering the financing of terrorism (AML/CFT). Part of the package is a Regulation establishing a new EU anti-money laundering authority (AMLA) which will directly supervise Europe’s most high-risk entities and have powers to impose sanctions and penalties (see our separate blogpost for an overview on the initial proposal).
After several political trilogues and technical negotiations during the past eight months, EU policymakers finally reached a partial political agreement on AMLA on 13 December 2023 (see official press release from the Council here and from the Parliament here).
In this blogpost, we provide a short overview on the key points of the partial political agreement:
I. Tasks of AMLA
Obliged entities are currently supervised at a national level only, resulting in an inconsistent enforcement of European AML/CFT law. To tackle this issue, AMLA will act as a central hub helping coordinate the actions of supervisors in different EU countries and ensuring convergence of supervisory practices.
In addition, AMLA will directly supervise certain types of credit and financial institutions, including crypto-asset service providers, that are considered to be the riskiest financial entities from an AML perspective, in particular those with operations in at least six member states - and in any event, one per member state. The first selection process will include the riskiest 40 groups and entities; the specifics of the first selection process are, however, still being debated.
For non-selected obliged entities in the financial sector, AML/CFT supervision will continue to take place at national level. Similarly, AMLA will rather have a supporting role outside the financial sector. In particular, it will carry out reviews and investigate possible breaches in the application of the AML/CFT framework.
Against this backdrop, AMLA is already considered to be “a game changer to crack down on dirty money in the EU” by members of the European Parliament.
II. Financial sanctions
The deep interrelation between sanctions compliance and AML has lately been highlighted by the international sanctions against the Russian Federation in response to its invasion of Ukraine. Therefore, AMLA shall also play a crucial role in avoiding the circumvention of targeted financial sanctions. It will be tasked with monitoring that selected obliged entities have internal policies and procedures in place to ensure the implementation of targeted financial sanctions, asset freezes and confiscations.
III. Governance and seat
AMLA will have a dual board system, including a general board and an executive board. While the executive board will be composed by the chair of the Authority and five independent full-time members, the general board will be composed by representatives of national supervisors and Financial Intelligence Units from the EU27 Member States.
The highly political question of AMLA’s seat has, however, not been answered yet, which is the main reason why the current agreement is only a partial one. The Council and the European Parliament are currently negotiating the principles of the selection process of AMLA’s seat location. The Parliament intends to host hearings with nine candidates (i.e. Brussels, Frankfurt, Dublin, Madrid, Paris, Rome, Riga, Vilnius and Vienna) that have expressed interest in hosting AMLA in the coming months.
IV. Next steps
Since EU policymakers have reached an agreement on the substantive provisions of AMLA, technical negotiations will continue in the coming weeks. Once the technical details are ironed out and there is a decision on AMLA’s seat, the EU Parliament and Council would need to formally adopt the final agreement on the AMLA Regulation. Given that EU elections are taking place in June 2024, the final agreement would need to be endorsed before the legislative activity in the Parliament stops in April 2024.
EU policymakers have, however, not yet managed to reach an agreement on the AML Regulation (AMLR) and the revised AML Directive (AMLD). Unless the Spanish Presidency finds a political agreement in the coming weeks, it will be up to the Belgian Presidency, starting on 1 January 2024, to finalise these two proposals that were also part of the broader AML/CFT legislative package in the first months of its rotatory Presidency of the Council.
