Home Sweet Home: Germany Wins the Race to Host AMLA

On February 22, 2024, it was announced by the Council of the European Union (EU) that Frankfurt emerged victorious in its bid to host the Anti-Money Laundering Authority (AMLA) the EU’s new bloc-wide regulatory body. 

AMLA is set to become operational in mid-2025, around 4 years after the European Commission originally proposed a regulation to establish a new EU AML authority.

What Will AMLA be Responsible for Regulating?

AMLA is going to have supervisory powers, direct and indirect, over high-risk financial entities. 
Given the cross-border nature of financial crime, a cross-border approach is needed to make the anti-money laundering and countering the financing of terrorism (AML/CFT) framework in Europe more efficient. This is where AMLA comes in.

As well as its supervisory powers over member states, AMLA will also have the power directly supervise certain groups and entities, and to impose sanctions on selected entities where “serious, systematic or repeated breaches of directly applicable requirements” are identified. The agency will also have some involvement in non-financial sectors and coordinating financial intelligence units (FIUs) in EU member states.

How Will AMLA Effect Financial Institutions and the EU?

Significant regulatory changes are on the horizon for financial institutions operating across Europe in 2024, with the EU’s single rulebook also coming into force in 2024. While the establishment of the AMLA should encourage regulatory harmonization and make things easier for cross-border trade and relationships, several tough hurdles remain for regulated firms. Hopefully, the presence of this new regulatory body will also encourage financial institutions to take advantage of modern technology solutions to move beyond current approaches that may be outdated or rigid. 

Nine EU member states originally submitted bids to host AMLA when the call for applications was put out in late September of 2023. Alongside Frankfurt, the European capitals in the running included Brussels, Dublin, Madrid, Paris, Riga, Rome, Vilnius, and Vienna.

The ultimate victory was secured through several rounds of voting in both the EU Council and the EU Parliament in a format that the media has compared to voting system used by the annual Eurovision song contest.

In the past, the seats of EU agencies have been selected by ministers in relative secrecy. However, the vote for AMLA represents the first public bidding for an EU agency seat and the first time the European Parliament has been involved in selecting the seat for an EU agency, following a 2022 ruling that that the competence to determine the location of the seat of EU agencies lies with EU legislature.

Why is Frankfurt the New Home of AML in the EU?

Germany is undergoing fundamental AML reforms with the inception of a new regional regulatory body: the Federal Office to Combat Financial Crime or, in German, Bundesamt zur Bekämpfung von Finanzkriminalität (BBF). These reforms, which kicked off in December of 2022, have been running in near parallel to the establishment of AMLA. The German ministry for finance has stated that one of the key missions of the BBF will be to focus on investigation of complex, international cases of money laundering, and to prevent money laundering taking a back seat to the investigation of other crimes. The country’s vehement re-commitment to AML and financial crime prevention has now been further cemented by becoming the chair for AMLA.

Frankfurt is also already home to the European Central Bank (ECB), so its success in additionally securing the AMLA win highlights the city – and Germany’s – growing influence in the European financial landscape.

Becoming the home of AMLA is a lucrative deal for Frankfurt, as the arrival of EU officials will make the city an appealing destination for foreign investment, particularly for companies hoping to get involved with the agency’s decision-making processes in future. 

Willkommen, Frankfurt! You will make a fine headquarters for the AMLA. At Fenergo we have always believed a centralized ecosystem is the best way to fight Financial Crime - it’s heartening to see that Europe agrees.