The Authority for Anti-Money Laundering and Countering the Financing of Terrorism Authority (AMLA) has been established under the new a European anti-money-laundering (AML) and counter-financing terrorism (CFT) Regulation (AMLAR). The AMLA is a new monitoring, investigative and supervisory EU authority and will differ from current member state AML and CFT national authorities.

As part of its role, the AMLA will implement a harmonized approach to strengthen the EU’s existing AML/CFT preventive framework, reducing the differences between the national legislation and supervisory practices of EU member states.

The new regulations introduce specific requirements for crypto-asset service providers, including mandatory registration and customer due diligence procedures.

AMLAR was published in the Official Journal of the European Union on June 19, 2024. The authority will start direct supervision of selected obliged entities (SOEs) in 2028 and will be located in Frankfurt, Germany.

Legal status, structure and general objectives of AMLA

AMLA will be a Union body with legal personality composed of a General Board (divided in two: Supervisory and FIU), an Executive Board, a Chair, an Executive Director and an Administrative Board of Review.

AMLA’s objective will be “to protect the public interest, the stability and the integrity of the Union’s financial system and the good functioning of the internal market.”

AMLA shall:

• prevent the use of the Union’s financial system for the purpose of ML/TF;
• contribute to identify and assess risks and threats of ML/TF, both across the internal market and those originating from outside the Union;
• ensure high-quality AML/CFT supervision;
• contribute to supervisory convergence in AML/CFT across the internal market;
• contribute to the harmonization of practices in the detection of suspicious flows of monies or activities by Financial Intelligence Units (FIUs), and
• support and coordinate the exchange of information between FIUs and between FIUs and other competent authorities.

With regard to supervision, AMLA will have a dual role:

1. it shall supervise directly a pre-defined number of SOEs, which shall be selected among the obliged entities (OEs) as defined under the AMLAR; and
2. it shall act as indirect supervisor for the non-selected obliged entities (NSOEs) and more generally as AML/CFT supervisor for the whole financial sector (for example by monitoring developments across the internal market in relation to ML/TF, by collecting and analyzing information provided by national authorities, etc., as provided for by Article 5 of AMLAR).

Direct supervision of SOEs

High-risk-profile credit institutions, financial institutions, including groups of credit or financial institutions (aka SOEs), will be under the direct supervision of the AMLA.

The AMLA will do the following:

• ensure group-wide compliance with the applicable requirements, including any other EU acts that impose AML/CFT-related obligations on financial institutions;
• carry out supervisory reviews and assessments in order to determine whether the processes in place are adequate to mitigate risks related to ML and TF; and
• participate in group-wide supervision with a focus on the colleges of supervisors, including where a specific SOE is part of a group that has headquarters, subsidiaries or branches outside the EU.

Indirect supervision by AMLA

In addition to the direct supervision, AMLA shall also indirectly supervise the whole financial sector for AML/CFT purposes.

AMLA shall especially:

• monitor developments across the internal market and assess threats, vulnerabilities and risks in relation to ML/TF;
• collect and analyse information, from its own supervisory activities and those of the national competent AML/CFT authorities, on weaknesses identified in the application of AML/CFT rules by OEs, the risk exposure of OEs, the sanctions imposed, and the remedial actions taken;
• develop, in co-operation with national competent AML/CFT authorities, a harmonized AML/CFT supervisory methodology detailing the risk-based approach regarding supervision;
• co-ordinate thematic reviews to be carried out by national authorities at European level, if relevant;
• establish and keep up to date a central database of AML/CFT information, including statistical information, information about administrative measures and pecuniary sanctions, etc;
• facilitate the functioning of the AML/CFT supervisory colleges in the financial sector;
• contribute, in collaboration with financial supervisors, to the convergence of supervisory practices and the promotion of high supervisory standards in the area of AML/CFT.

The AMLA’s guidelines will be addressed to all AML and CFT national authorities, FIUs, or obliged entities. These guidelines will not be binding however, and do not render member states’ own FIUs redundant. The AMLA will not replace the current system. The objective is to strengthen and support the currents FIUs.

Speaking at the European Anti-Financial Crime Summit, Deputy Governor of the Central Bank of Ireland Derville Rowland said: “The creation of this authority (AMLA) is a significant step in the right direction to confront the challenges we face, today and tomorrow. It presents a unique opportunity to grasp the nettle of regulatory fragmentation and eliminate the weak points in the current European AML Framework. However, we should not be complacent in assuming that AMLA’s success in combatting money laundering is guaranteed.” 

For further information on AMLA please refer to the European Commission website: AMLA – European Commission (europa.eu)