On December 13, 2023, a provisional agreement was reached between the European Commission (EC), European Parliament (EP), and EU governments (Council) regarding the creation of a new European authority for Anti Money Laundering and financing of terrorism (AMLA).
This agreement came after months of intense negotiations to reform EU rules on anti-money laundering and countering the financing of terrorism (AML/CFT). The main goal of this agreement is to protect EU citizens and the EU’s financial system from money laundering and terrorist financing.
In July 2021, the EU Commission presented a package of legislative proposals to strengthen the EU’s rules on AML/CFT. This package includes the establishment of a new EU anti-money laundering authority, regulations on transfers of funds and anti-money-laundering requirements for the private sector, and a directive on anti-money-laundering mechanisms. A provisional agreement on the regulation on transfers of funds was reached on June 29, 2022.
The new authority, AMLA, aims to enhance the efficiency of the AML/CFT framework by creating an integrated mechanism with national supervisors to ensure compliance with AML/CFT obligations in the financial sector. AMLA will also coordinate financial intelligence units in member states and have a supporting role in non-financial sectors. It will have supervisory powers over high-risk entities in the financial sector, including certain credit and financial institutions and crypto asset service providers operating across borders.
AMLA will monitor the implementation of targeted financial sanctions, asset freezes, and confiscations by selected obliged entities. It will have a general board composed of representatives from all member states and an executive board that will govern the authority. The provisional agreement introduces a strengthened whistle-blowing mechanism and removes the Commission’s veto right on certain powers of the executive board.
The location of AMLA’s seat is still being discussed separately. Its establishment is crucial for Cyprus as it ensures compliance with EU AML regulations, enhances oversight, facilitates collaboration among EU financial authorities, and has economic impacts that can boost the country’s stability and attractiveness to investors. Cyprus is also a potential candidate for hosting AMLA’s seat, which would bring administrative and reputational benefits.
The provisional agreement will now undergo finalization and approval from member states’ representatives and the EP. If approved, the Council and EP will formally adopt the texts. Negotiations are ongoing for the regulation on anti-money-laundering requirements for the private sector and the directive on anti-money laundering mechanisms.
