EU Leaders Reach Partial Position On New AML Watchdog

July 1, 2022
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The European Council wants to expand the powers of the EU’s planned new anti-money laundering authority, but a row over where it should be based has prevented the Council from agreeing fully with the European Commission’s proposals.

The European Council wants to expand the powers of the EU’s planned new anti-money laundering authority (AMLA), but a row over where it should be based has prevented the Council from agreeing fully with the European Commission’s proposals.

The EU’s new AML supervisor is supposed to be in place by 2024, but before then the EU’s co-legislators need to establish where the institution will actually be based.

Rumours suggest that the watchdog could be headquartered in Vienna.

However, Frankfurt and Paris are also believed to be in the running, and the Netherlands has also reportedly made a bid for the institution to be located in The Hague.

Tussles over who gets the agency, which is due to have a provisional set of 250 staff, were among the concerns of EU AML experts at the time of the European Commission’s proposal, but appeared inevitable.

In spite of ongoing negotiations, EU leaders have now agreed on their position regarding the role of the AMLA.

In its position, the Council, which consists of member state governments, adds powers to the AMLA to directly supervise certain types of credit and financial institutions, including payments crypto-asset service providers, if they are considered risky.

It also entrusts the authority to supervise up to 40 groups and entities — at least in the first selection process — and to ensure complete coverage of the internal market under its supervision.

In addition, more powers are being given to the general board in the governance of AMLA in the Council’s proposals.

For example, the Council has suggested that the executive board of the authority should be empowered to impose periodic penalty payments to compel a legal or natural person to cease the relevant conduct.

With the aim of encouraging firms to adopt business practices in line with the current AML framework, sanctions and penalties should be disclosed, the Council has lobbied.

This expands the role of AMLA from Brussels’ plans, which were outlined in a financial crime package last summer.

Originally, the European Commission proposed the right for the AMLA to directly supervise the EU’s largest, mainly cross-border, institutions, including the possibility of launching investigations and imposing sanctions.

The commission wanted to focus its efforts on large lenders who operate in at least seven of the 27 member states and are deemed high-risk by at least four.

Meanwhile, further scrutiny was envisaged by the proposal to be carried out on those financial and credit institutions, as well as other non-bank financial institutions operating in at least ten EU countries, if they engage in business that is deemed to have sufficient risk.

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