New European Anti-Money Laundering Authority Will Have Broad Normative Powers

State of the Legislation

The EU AML package constitutes a significant shift in the fight against money laundering and terrorist financing in the EU, as one of its main goals is to reinforce the efficacy of this fight by enabling a greater harmonization of AML rules. The package includes three substantial legislative acts: Directive (EU) 2024/1640 on the prevention of using the financial system for the purposes of money laundering or terrorist financing; Regulation (EU) 2024/1624, also on the prevention of using the financial system for the purposes of money laundering or terrorist financing, which will eventually replace the current European AML Directive (EU) 2015/849; and Regulation (EU) 2024/1620 establishing the AMLA. 

This Commentary is the first in a series of quarterly publications that will cover the main changes to EU and national AML frameworks induced by the EU AML package. In particular, upcoming Commentaries will cover AMLA's direct and indirect supervisory powers, the impacts of the AML package on crypto-asset service providers, AMLA's sanctioning powers, and the main changes to AML due diligence requirements stemming from Regulation (EU) 2024/1624.

This Commentary will focus on the rationale for the establishment of AMLA, highlight its governance structure, and detail its normative powers and their impacts.

AMLA's Rationale

The current European AML framework is the result of the transposition into EU Member States' national laws of the rules from various European AML Directives adopted since 1991. Certain aspects of those rules have led to diverging interpretations and supervisory practices. 

To ensure greater consistency and deeper harmonization of AML rules at EU level, it was decided to create an authority responsible for contributing to the implementation of harmonized rules and supervisory practices in that domain, hence the establishment of the AMLA. While the separation of powers between AMLA and national AML supervisory authorities is not covered by this Commentary, it is worth noting that such national authorities will retain some of their current prerogatives, in particular towards entities that will not be subject to AMLA's direct supervision. 

Located in Frankfurt am Main, the AMLA aims to replace the EBA in its AML-related tasks and powers once it becomes fully operational by January 2028.

AMLA's Governance Structure 

AMLA has two main bodies, namely the General Board and the Executive Board. AMLA's governance structure also includes a Chair of the Authority, an Executive Director, and an Administrative Board of Review. 

The General Board is the body responsible for exercising the normative powers of the AMLA, and has two committees: a supervisory committee with heads of public authorities responsible for AML supervision, and a Financial Intelligence Units ("FIU") committee with the heads of the FIUs from all EU Member States.

The Executive Board is the governing body of the AMLA in charge of the planning and execution of all tasks of the Authority not expressly allocated to the General Board, including for example taking binding decisions towards obliged entities or recommendations against individual supervisory authorities.

The executive bodies of AMLA and the European Supervisory Authorities ("ESAs") are substantially different in terms of composition. Indeed, the Executive Board of the AMLA includes the Chair of the Authority and five full-time independent members chosen following an open selection procedure, whereas the ESAs' executive bodies (i.e., the Management Boards) comprise their respective chairs and six representatives from national competent authorities. Such an independent composition of AMLA's executive body is designed to ensure the effectiveness of the AMLA decision-making process and its independence vis-à-vis national competent authorities, which is crucial as the AMLA is authorized to initiate investigations and issue recommendations against failing national AML supervisory authorities.

AMLA's Normative Powers

AMLA is empowered to develop draft Regulatory Technical Standards ("RTS") and Implementing Technical Standards ("ITS") for the European Commission. Notably, AMLA has been designated to develop draft RTS specifying the methodology for classifying the inherent and residual risk profiles of credit institutions. These RTS will be used during the selection process of obliged entities that will be under AMLA's direct supervision. In addition, AMLA has been instructed to draft RTS on customer due diligence setting out the minimum set of information to be obtained by obliged entities. These two draft RTS, among others, are currently in the public consultation phase until June 6, 2025. 

To establish effective and efficient supervisory practices and to ensure a common and uniform application of EU law, AMLA will issue guidelines and recommendations to national competent authorities, FIUs, and obliged entities, either pursuant to a specific empowerment or on its own initiative.

Finally, AMLA has received the power to provide opinions to the European Parliament, the Council, or the European Commission, as well as technical advice, either at the request of these institutions or on its own initiative.

Such normative powers are common in the EU supervisory framework as the three other ESAs can also develop draft RTSs and ITSs for the European Commission, issue guidelines and recommendations, and provide opinions and technical advice.

These normative acts and publications, in addition to EU AML regulations, will form the EU AML Single Rulebook, which will be made available via a publicly accessible tool and should ensure that, also in scenarios where supervision remains at national level, the same supervisory practices and standards are applied.