Agreement on the creation of AMLA

The discussions around harmonising the rules on AML across the Member States have been going on for quite some time. The financial sector and market players are also well aware of the intentions to create one central authority for supervision in this space. Despite AML rules being transposed into Member States from the many directives, there continues to be significant differences in standards across Europe.

On 13 December 2023, the European Council and the European Parliament reached an agreement on the creation of a new European authority for countering money laundering and financing of terrorism (the "AMLA"). By way of reminder, the purpose of AMLA is to safeguard both EU citizens and the EU's financial system from the threats of money laundering and terrorist financing. The authority will possess both direct and indirect supervisory authority over "high-risk obliged entities" within the financial sector. AMLA will establish an integrated mechanism with national supervisors to ensure that obliged entities in the financial sector adhere to AML/CFT-related obligations.

Although there is not a draft text regarding this agreement, we can flag the following points:

• Supervisory powers: The provisional agreement empowers AMLA to directly supervise high-risk credit institutions, including institutions that operate across borders and crypto service providers. AMLA will oversee up to 40 selected entities through joint teams and non-selected entities will be supervised at the national level. In the non-financial sector, AMLA will support with reviews and investigations, issuing non-binding recommendations;

• Disagreements: AMLA will be empowered to resolve disputes with binding authority within financial sector colleges. Additionally, in any other scenario, AMLA can intervene at the request of a financial supervisor to settle disagreements.

• Financial sanctions: AMLA will ensure selected obliged entities implement internal policies for targeted financial sanctions, asset freezes, and confiscations;

• Governance: AMLA will feature a general board, including representatives from supervisors and Financial Intelligence Units (the "FIU") across all Member States. The executive board, serving as the governing body, will consist of the Authority's chair and five independent full-time members.

• Whistleblowing: The provisional agreement establishes a strengthened whistleblowing mechanism. AMLA will handle reports exclusively from the financial sector concerning obliged entities. Additionally, it will have the authority to address reports from employees of national authorities.

Although there are still some points under negotiations, such as the AMLA's seat location, the text of this provisional agreement will be finalised and 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.