AMLA in action: strengthening AML efforts

To combat this global scourge, the EU first sought to strengthen its legislative arsenal in the 90s with the adoption of several anti-money laundering directives, which failed to achieve the desired results.

Indeed, the volume of money laundered has continued to rise, and recent years have seen a succession of scandals in the European financial sector. The European authorities have finally decided to tackle the problem head-on, with the creation of an authority dedicated to the fight against ML/FT.

AML before AMLA: a monitoring framework to improve

The reasons for the failure of the current supervisory framework are numerous: gatekeepers' lack of vigilance, whether intentional or not, in monitoring financial transactions, negligence in applying AML/CFT provisions, and the informational dependence of financial intelligence units (FIUs) on gatekeepers and of criminal authorities on FIUs.


According to the Cour des Comptes at the end of its audit on the EU's AML/CFT action in the banking sector in 2021), the problem lies in the fact that the different interpretations of the Directives by national legislators and the differing resources and powers that Member States attribute to their supervisory authorities de facto limit the quality and quantity of information that can be exchanged between them, as well as their ability to cooperate, as demonstrated by the Danske Bank case (cf.: exchanges between the Danish authority and its Estonian counterpart in the Danske Bank case). These disparities in application create "weak points" that can be exploited by criminals.

What is the EU's current solution for combating money laundering?

To remedy the problem, the European Commission has decided to take a real step forward by presenting a package of legislative proposals on July 20, 2021 to strengthen EU AML/CFT rules.

At the heart of this legislative package are, in addition to a sixth AML Directive, 2 regulations: Regulation 2021/0239 relating to the prevention of the use of the financial system for the purposes of AML/CFT and Regulation2021/0240 establishing a European Authority to combat AML/CFT.

The European legislator's recourse to a Regulation, directly applicable in all member states, makes up for the weaknesses inherent in the European Directives on which the EU's anti-money laundering system has been based until now. With the creation of the AMLA, the European Commission wishes to move from 27 national approaches to AML/CFT to the implementation of a truly unified European approach.

How does AMLA work?

The AMLA is a decentralized EU agency with legal personality, whose aim is to prevent AML/CFT in the EU, by helping to strengthen supervision and improve cooperation between FIUs and supervisory authorities.
In terms of personnel, the Commission estimates the number of staff required at 250, whereas the Council has calibrated the project at over 400. This figure seems relatively modest given the agency's needs. By way of comparison, no fewer than 1,300 positions were created at the ECB after the 2008 financial crisis to supervise some 115 eurozone banks.

What is the composition of the AMLA?

AMLA will have two collegiate governing bodies:

The Executive Council comprising five full-time independent members and the Chairman of the Authority. It will take all decisions relating to the various entities subject to regulation or the various supervisory authorities. The Executive Board will also take decisions concerning the draft budget and other matters relating to the administration, activities and operation of the Authority.

It should be noted that an Administrative Review Board will be set up to deal with appeals against the Authority's binding decisions concerning entities under its supervision. Its decisions may be challenged before the Court of Justice of the European Union.

The General Council made up of representatives of the Member States, which may adopt all necessary regulatory instruments, draft regulatory technical standards and implementing technical standards, guidelines and recommendations. To manage the various tasks entrusted to the Authority, the General Council may meet in one of the following configurations:

• 1

  a supervisory board, comprising the heads of the public authorities responsible for AML supervision. In its "surveillance" section, it may give its opinion on a selected reporting entity subject to direct supervision, before the final decision is adopted by the Executive Board.

• 2

  an FIU composition, comprising the heads of the FIUs in the Member States. Both compositions will be chaired by the Chairman of the Authority.

In addition to these collegiate bodies, the Authority will have a Chairman, who will represent it and be responsible for preparing the work of the General Council and Executive Board, and an Executive Director, who will be responsible for the day-to-day management of the Authority and will have administrative responsibility for budget execution, resources, personnel and public procurement.

What powers will the AMLA have?

Monitoring role

The AMLA will directly supervise a numb er of financial sector entities selected on the basis of their intrinsic level of risk in a minimum number of Member States and their cross-border activity. The criteria used to calculate risk are the customers, the products offered and the geographical areas in which they operate.
In practice, this means that, unlike the FIUs, its dependence on the supervised players is minimal. The creation of this new authority will also enable us to better manage risks in real time, and minimize response times.

The number of entities under supervision will be a maximum of 20 in the initial proposal. In this context, it will be able to impose binding decisions on the selected entities and impose administrative sanctions, the maximum amount of which will depend on the violation found, and could reach 10 million euros or 10% of sales, whichever is higher.

Summary table of the penalty system :

Defaults	Sanctions
	Identified in an EU member state	Identified in several EU member states
Failure to comply with customer due diligence requirements, Group policies and procedures, and reporting obligations	500K euro to 1M euro or 0.5% of annual sales	1M euro to 2M euro or 1% of annual sales
Failure to comply with any other obligation listed in Annex II of the AMLA regulation proposal	500K euro to 1M euro	1M euro to 2M euro
Violations of AMLA decisions	100K euro to 1M euro

The AMLA will monitor other reporting entities indirectly through national supervisory authorities if there are indications of substantial breaches of AML/CFT obligations. These entities will encounter greater demands by national supervisors, particularly since the AMLA will have the authority to assume the supervisory duties of a national supervisor if the latter fails.

It will supervise the national supervisory authorities by carrying out periodic checks to ensure that they are functioning properly..

Support and coordination

The Authority will also take over responsibility for managing two existing infrastructures: a) the AML/CFT database, currently managed by the European Banking Authority, and b) the AML/CFT database, currently managed by the European Banking Authority. FIU.net platform, a secure communications network that centralizes the exchange of information between FIUs and facilitates joint analyses.
It will intervene, with binding effect, in the event of a dispute between financial supervisors over the measures to be taken in respect of a reporting entity.

Legislative role

AMLA will work closely with national FIUs to harmonize AML/CFT regulations, methodologies and reporting standards. This will improve the detection and tracking of illicit financial flows, making it more difficult for money launderers and terrorists to exploit discrepancies between different jurisdictions.

To this end, it will have the power to draw up draft technical regulatory and implementing standards, issue guidelines and recommendations, and issue opinions to the 3 main European institutions.

Tomorrow's AML/CFT: a stronger framework

The creation of the AMLA marks a decisive step in the EU's approach to combating AML/CFT.
It aims to fill the gaps left by the past, strengthen the resilience of the European financial system, and send a clear message about the EU's commitment to protecting its market.

The FIUs will continue to be the main point of contact for receiving declarations of suspicion financial and non-financial players, and will continue to analyze this information at national level. If the ALBC decides to initiate an investigation or audit of a specific entity in a country, the FIUs will play an operational support role.


The AMLA, FIUs and supervisory authorities will now have complementary roles and will need to cooperate with each other, resulting in greater coordination and ultimately better use of resources.

The superimposition of a new institution at EU level will thus serve to strengthen the supervisory arrangements and the FIU network, and will, in short, aim to make the fight against transnational financial threats more effective.