Insights

On 13^th December 2023, the European Council and European Parliament have provisionally reached an agreement to establish the Anti-Money Laundering Authority (“AMLA” or “the Authority”). This agreement, however, does not include AMLA’s location which is a matter that is subject to an ongoing discussion.

AMLA will be acting as the EU’s money laundering watchdog ensuring effective enforcement of the EU’s rules on fighting money laundering and the financing of terrorism. The proposal on the establishment of AMLA was initially tabled by the European Commission on 20 July 2021 as part of a legislative package aimed at implementing the 2020 action plan for a comprehensive European Union policy on preventing money laundering and the financing of terrorism.

The below are the main salient points pertaining to AMLA.

Supervisory Powers

AMLA will be directly supervising high-risk obliged entities in the financial sector, predominantly, those credit and financial institutions, including crypto asset service providers, having operations in at least six (6) Member States. For the other obliged entities, supervision would remain under the national competent authority. Furthermore, AMLA will also have powers to intervene and contribute to supervisory duties, and if the case arises, supervisory failures as well. When serious, systematic, or repeated breaches of directly applicable requirements arise, AMLA will also have powers to impose pecuniary sanctions on the obliged entities in question.

With respect to the non-financial sector, AMLA will provide support to the national supervisors by carrying out reviews and investigations leading to possible breaches in the application of the AML/CFT framework. AMLA will also have powers to issue non-binding recommendations.

Sanctions

Apart from the direct supervision relating to the internal AML/CFT framework adopted by the selected entities, AMLA will be also monitoring the internal policies and procedures adopted by such entities to ensure the implementation of targeted financial sanctions, asset freezes and confiscations.

Assistance to Financial Intelligence Units (“FIUs”)

AMLA will also act as a coordinator to manage the actions taken by national FIUs of EU Member States to ensure convergence of supervisory practices. Furthermore, the Authority will be assisting FIUs in the review and analysis of suspicious transactions and the detection of other possible money laundering practices. This will be notably carried out by providing support through joint analysis, and the FIU.Net, which is the IT system used for FIU information sharing.

Governance Structure

The governance structure of AMLA will generally be composed of:

1. A General Board comprising of representatives of FIUs from all EU Member States; and
2. An Executive Board, that will be ultimately the governing body of the Authority, composed of the Chair of the Authority and five independent full-time members.

Whistleblowing Reporting

AMLA will be also dealing with whistleblowing reports submitted by the chosen entities within the financial sector. Other whistleblowing reports reported by the other entities in the financial and non-financial sector will be dealt with at national level, by the relevant competent authorities. Furthermore, the Authority will also have powers to review reporting from staff within national authorities.

AMLA Location

The European Council and European Parliament are currently in negotiations to come up with the main principles pertaining to the selection process of AMLA’s seat location. Once the selection process for the new location is agreed and finalized, the location chosen will be introduced in the regulation. In this respect, nine (9) Member States have submitted applications to host AMLA including Austria, Belgium, France, Germany, Ireland, Italy, Latvia, Lithuania, and Spain.