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The Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) is due to begin operations in Summer 2025, and will represent a fresh approach to countering money laundering in the EU.
AMLA’s goal is to become the centre of an integrated system of national anti-money laundering and counter-terrorism financing (AML/CTF) supervisory authorities, ensuring their mutual support and cooperation.
If effective, it should increase the EU’s ability to detect and prevent money laundering, closing gaps that criminals have been exploiting for years and that the EU’s countless directives on the matter have failed to deal with.
AMLA’s success will hinge on whether it can enforce rules effectively and coordinate activity among at least 27 national authorities.
The organisation, which will be based in Frankfurt, has made significant strides in building its operations this year, appointing Bruna Szego as its first chair in January and signing a lease on its office space in April.
In May, it announced the first full-time members of its executive board from national regulators across the trading bloc — Lithuania's Simonas Krėpšta, Denmark’s Rikke-Louise Petersen, Ireland’s Derville Rowland and Spain’s Juan Manuel Vega Serrano — who will serve a four-year term beginning June 1, 2025.
AMLA will not replace national supervisors and financial intelligence units (FIUs), but will instead seek to boost cooperation, information exchange and the identification of best practices among existing organisations.
In creating a dedicated agency to combat money laundering, the EU is following the example of jurisdictions such as the US, where the Financial Crimes Enforcement Network (FinCEN) serves as the primary agency overseeing AML efforts and coordinating with other federal and international bodies.
Similarly, the Australian Transaction Reports and Analysis Centre (AUSTRAC) is a specialist agency focused on detecting and preventing financial crime.
Tackling fragmentation
First proposed in 2021, the creation of AMLA was pitched as a way to address the EU’s long-standing weaknesses in AML enforcement.
The bloc has traditionally struggled with AML enforcement due to its fragmented regulatory structure, which involves leaving supervision in the hands of the various national authorities.
The flaw in this approach is that it has permitted significant inconsistencies in implementation, creating loopholes that criminals have been quick to exploit.
AMLA will aim to focus its activities on harmonising enforcement across member states, ensuring broadly consistent enforcement of regulation and closing the gaps that have allowed criminal activity to proliferate.
How effective it can be in its mission will likely depend on the level of influence it can assert with national regulators, how aggressive it is in pursuing enforcement actions and whether or not it can close the loopholes that have enabled money laundering activity in the past.
The Danske Bank scandal
One example of money laundering that exposed the inadequacy of the EU’s AML regime was the Danske Bank money laundering scandal, which came to light in 2017-18.
It transpired that around €200bn of suspicious transactions had flowed from sources in Estonia, Russia and Latvia via the Estonian branch of the bank during the period 2007-15.
Criminals exploited jurisdictional differences, with Estonia’s regulators failing to act decisively and the Danish authorities failing to prioritise AML risks.
The scandal exposed the poor coordination among national regulators within the EU and led to Danske Bank being required to cease its operations in Estonia.
In addition, its then chief executive, Thomas Borgen, resigned and subsequently faced criminal proceedings from the Danish authorities.
The European Banking Authority’s (EBA) handling of the issue drew heavy criticism and was one of the catalysts for the creation of AMLA as a pan-EU entity with the authority to deal with cross-border AML cases.
Key areas of focus
The hope in the EU is that AMLA’s direct oversight of high-risk cross-border entities could help prevent such failures of AML/CTF supervision in the future.
It will likely need to be proactive and even aggressive in the way it deals with financial institutions, and there will need to be meaningful consequences for non-compliance.
By directly supervising high-risk financial entities, AMLA should be able to improve the oversight of AML/CTF activity across the bloc, particularly in instances where national regulators have been slow or ineffective.
However, the authority will have to navigate the kind of political and industry pressures that have plagued EU AML policy in the past.
For example, some member states have been accused of turning a blind eye to illicit financial flows in order to attract investment.
And the inclusion of member states such as Croatia and Bulgaria on the Financial Action Task Force (FATF) grey list highlights concerns over weak enforcement, particularly in sectors such as real estate, gaming and crypto.
These areas will have to be priorities for AMLA as it gets started on the process of changing the way the EU addresses money laundering.
Challenges and possibilities
Although AMLA has the potential to make a significant impact on the effectiveness of the EU’s AML framework, the various challenges it faces mean that it has plenty of work to do.
The new authority cannot be expected to end all AML problems in the EU, but if well staffed and run it could make life much harder for criminals by closing the regulatory gaps they have exploited in the past.
An effective bloc-wide approach to tackling money laundering should reduce the likelihood of major scandals such as the Danske Bank case happening in the future.
However, if AMLA proves ineffective it would be a significant missed opportunity for the EU, which would have to find another way to improve the oversight of money laundering risk.
It would also reinforce perceptions that the bloc cannot enforce its financial crime rules in a meaningful way, which would leave other jurisdictions to take the lead in shaping global AML/CTF policies.
