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This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No101022004

The Anti-Money Laundering Authority (AMLA): A new EU authority to strengthen the AML toolkit

The development of digital technologies and growing global economy have created many opportunities for criminals and money launderers who rely on technological progress to exploit legal loopholes. The diversity of their criminal schemes makes the fight against money laundering challenging for national, regional and international policy- and lawmakers.

The European Union (EU) has been at the forefront of strengthening anti-money laundering (AML) policies and legislations, and, since July 2021, it has been moving towards the adoption of a new anti-money laundering package (“AML Package”). As money laundering practices have evolved at an unprecedented pace and technology has become the ally of criminals, this has enabled them to exploit existing legal gaps (e.g., lack of cross-border mutual assistance and a centralized supervision authority). 

The EU AML Package includes a Regulation on AML requirements for the private sector, a Directive on AML mechanisms, a revision of the Regulation on transfer of funds, and the creation and implementation of a new AML authority (AMLA). Even though the Council and the European Parliament reached a provisional agreement on parts of the AML package on 18th January, 2024, the negotiations on the adoption of the AML package as a whole are continuing. On the other hand, in December 2023, both institutions agreed on the creation of the AMLΑ as well as on the procedure of selecting a seat for it. The creation of this new central authority is paramount to elevating the EU’s AML endeavors. Its primary goal is to strengthen and standardize collaboration and enforcement initiatives among Financial Intelligence Units (FIUs) and supervisory authorities across EU Member States, thereby enhancing effectiveness and coherence in addressing financial criminality.

The AMLA will undertake the following supervision tasks: (i) direct supervision of certain obliged entities, particularly those operating in high-risk cross-border financial sectors or those experiencing compliance issues under the direct supervisory authority (Articles 12-27 Proposal for a Regulation establishing the Authority for Anti-Money Laundering and Countering the Financing of Terrorism and amending Regulations (EU) No 1093/2010, (EU) 1094/2010, (EU) 1095/2010); (ii) acting as a central indirect supervisor for non-selected (Articles 25-27) and non-financial obliged entities (Articles 28-29), such as real estate, gambling, and crypto-assets, coordinating and overseeing national AML/CFT supervisors, including self-regulatory bodies (SBRs); (iii) establishing coordination and technological support for FIUs, implementing technical standards, binding templates, and models for reporting suspicious transactions (STRs) and activities (SARs) from obliged entities to FIUs, and enabling more efficient information exchange and cooperation across different EU Member States (Articles 33-37). Additionally, the AMLA will have the power to impose fines and other sanctions on entities found to be in violation of AML/CFT regulations, particularly in cases involving serious, systematic, or repeated misconduct.

In line with the AMLA’s goal of coordinating and providing support to FIUs through advanced technological tools, the TRACE Consortium has been developing AI-based solutions to assist Law Enforcement Agencies (LEAs), including FIUs and judicial authorities, in tracing illicit money flows (IMFs). Through comprehensive analysis of existing AML practices and approaches throughout the EU, TRACE findings indicate that major challenges hindering AML regulatory efforts stem from inadequate integration of technological solutions to aid LEAs, deficient information sharing practices, and ineffective cross-agency collaboration.

By facilitating joint analysis of cross-border STRs and SARs, reviewing analysis procedures, and overseeing, the AMLA aims to improve communication among FIUs and address the aforementioned challenges. In this context, the TRACE toolkit is designed to analyse extensive financial transaction data from large datasets. Thus, it can enable the end-user to identify suspicious patterns indicative of money laundering and other illicit money flows. Moreover, it facilitates the mapping of complex financial networks by linking seemingly unrelated transactions, entities, and individuals, thereby enabling an understanding of the bigger picture of IMFs. Furthermore, the TRACE tools are designed to continuously learn and enhance their data analysis capabilities as they assimilate new databases or receive information shared between LEAs and FIUs.In sum, the TRACE toolkit is crafted to support the implementation of measures highlighted as key objectives of AMLA, ensuring that LEAs’ technological equipment remains on par with the sophisticated tools employed by criminals to obfuscate the illicit origins of their funds. This proactive approach aims to curb money laundering, a practice detrimental to national budgets and, consequently, to citizens’ liberties. 

Author: Julia Werberich, NOVA School of Law

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