EU Agrees on AMLA's Role in Policing Sanctions Evasion Amid Marathon Talks

In a significant development during marathon negotiations, negotiators from the European Parliament and European Council have reached an agreement on the role of the European Union’s new Anti-Money Laundering Authority (AMLA) in supervising the circumvention of targeted financial sanctions. The decision comes in response to demands from Members of the European Parliament (MEPs), particularly focusing on monitoring banks' enforcement of the 11 sanctions packages against Russia.

The additional responsibility for AMLA coincides with this week’s new directive criminalizing sanctions evasion, placing an added burden on EU banks’ sanctions and Financial Crime Compliance (FCC) teams. This has raised the possibility of senior executives facing criminal charges if a lender's sanctions policy is found to be errant, bringing increased scrutiny to EU individual accountability and senior accountability regimes.

While the laws (Directive and Regulation) behind AMLA have been agreed upon, the negotiations failed to determine the agency's location. The selection process for AMLA’s host city is expected to continue into 2024, with nine bidding cities vying for consideration.

AMLA's scope includes directly supervising the riskiest financial entities, those with operations in at least six member states, and overseeing one per member state. It will also play a crucial role in preventing the circumvention of targeted financial sanctions, including those against Russia.

Co-rapporteur Eva Maria Poptcheva emphasized the significance of the agreement, stating, "AMLA will be a game-changer to crack down on dirty money in the EU. It will supervise the 40 riskiest financial entities and oversee the non-financial sector to prevent cases like the Pandora Papers."

AMLA's responsibilities extend to supervising the bloc’s new rulebook on combating dirty money flows, mediating and settling disputes between national authorities, and supporting financial intelligence units in analyzing suspicious transactions.

The negotiations also resulted in a provisional agreement on elements of the wider money-laundering package, harmonizing anti-money laundering and anti-terrorist financing rules across member states.

Commenting on the agreement, Mairead McGuinness, European Commissioner for Financial Services, expressed optimism, stating, “AMLA will be a game-changer in the fight against money laundering.” However, decisions regarding AMLA’s seat and budget are yet to be reached in subsequent trilogues.

Co-rapporteur Emil Radev highlighted the strong role AMLA has been assigned, emphasizing its direct supervision of the riskiest companies in the financial sector and cryptocurrency providers operating in multiple member states.

The head of the European Financial & Economic Crime Centre at Europol, Burkhard Mühl, welcomed the political agreement on AMLA’s regulation as a decisive step forward in effectively combating money laundering in the European Union.

As the process moves forward, transparency and adherence to objective criteria will be crucial in selecting AMLA’s seat, demonstrating the commitment of the European Parliament and Council to enhance efforts in preventing the flow of illicit funds through the financial system.

By fLEXI tEAM