European Union Will Create the New Anti-money Laundering Body

On December 13, the European Council and the Parliament concluded a provisional agreement on creating a new European authority for countering money laundering and financing of terrorism (AMLA) – the key authority of the anti-money laundering and anti-terrorist financing package harmonisation process.

Tasks and Powers of AMLA

AMLA will have supervisory powers over credit and financial high-risk obliged entities (including crypto asset service providers) and function within anti-money laundering and countering the financing of terrorism (AML/CFT) framework, uniting efforts with national supervisors to ensure that obliged entities comply with AML/CFT-related obligations in the financial sector.

In cases of serious, systematic or repeated breaches of directly applicable requirements, the Authority will have powers to impose pecuniary sanctions on the selected obliged entities.

AMLA supervisory teams will be authorised to carry out assessments and inspections. The first selection will cover up to 40 groups and entities in the financial sector to be inspected. For non-selected obliged entities, AML/CFT supervision would remain primarily at national level.

For the non-financial sector, AMLA will have a supporting role, carrying out reviews and investigating possible breaches in the application of the AML/CFT framework, as well as developing non-binding recommendations.

The provisional agreement provides for the establishment and management of a central database of AML/CFT and entrusts AMLA with this procedure.

AMLA will have a general board composed of representatives of supervisors made up of Financial Intelligence Units from all member states, and an executive board, that would be the governing body of the AMLA, composed of the chair of the Authority and five independent full-time members. The Authority will be given the power to settle disagreements with a binding effect in the context of financial sector colleges and, in any other case, upon the request of a financial supervisor. The place of the seat is being currently discussed.

Next Steps

The text of the provisional agreement will be presented to member states’ representatives and the European Parliament for approval. If approved, the Council and the Parliament will have to formally adopt the texts.

Negotiations between the Council and Parliament on anti-money-laundering requirements for the private sector and the directive on anti-money laundering mechanisms are ongoing.

Background

On July 20, 2021, the Commission presented its package of legislative proposals to strengthen the EU’s rules on anti-money laundering and countering the financing of terrorism (AML/CFT). It consists of:

– a regulation establishing a new EU anti-money laundering authority (AMLA) which will have powers to impose sanctions and penalties;

– a regulation recasting the regulation on transfers of funds which aims to make transfers of crypto-assets more transparent and fully traceable (approved in June 2022);

– a regulation on anti-money-laundering requirements for the private sector;

– a directive on anti-money-laundering mechanisms.

Press release

Council’s proposal for the creation of AMLA