Direct Supervisory Powers of the New European Anti-Money Laundering Authority

On May 30, 2024, the European Parliament and the Council adopted a package of new AML rules aimed at reinforcing the efficacy of the fight against money laundering and terrorist financing in the EU by enabling a greater harmonization of AML rules and establishing the European AMLA. This Commentary is the second in our "New EU AML Package: Impacts and Challenges" series, which addresses the key elements of these new rules. The other articles in this series can be found here, as they are released.

AMLA will exercise direct and indirect supervision over credit and financial institutions and will oversee the non-financial sector. An upcoming Commentary will be dedicated to AMLA's indirect supervisory powers.

Selection of Directly Supervised Groups and Entities

AMLA will directly supervise 40 groups and entities among financial and credit institutions operating in at least six Member States, regardless of whether through the freedom of establishment or the freedom to provide services (first step of the selection process), and exposed to the highest risks of money laundering and terrorism financing (second step). 

These groups or entities will be referred to as "selected obliged entities" and will need to prepare with their compliance teams for a new supervisory environment providing for more intrusive supervisory engagement. It is too early to know precisely which group or entities will be subject to AMLA's direct supervision, but the highest-risk cross-border credit and financial institutions (including, but not limited to, crypto-assets service providers, e-money institutions, collective investment undertakings, payment institutions, life insurance undertakings, etc.) are likely to be concerned.

The precise criteria for identifying and selecting these selected obliged entities will be provided in Regulatory Technical Standards, or RTS, scheduled to be applicable from July 10, 2027, and for which a public consultation launched by the European Banking Authority ended on June 6, 2025. 

The selection process will be performed by AMLA in collaboration with financial supervisors, following the two abovementioned steps (i.e., geographical span and risk profile), and will be based on harmonized methodology. The first selection will be conducted from July 1, 2027, during six months, with the direct supervision of selected obliged entities transferred to AMLA as of January 1, 2028. The list of selected obliged entities will be published by the AMLA without undue delay upon completion of the selection process.

The group of selected obliged entities will be reviewed periodically, every three years.

AMLA could also directly supervise entities not being part of the list of 40 selected obliged entities: 

• Where there is indications that an entity is systematically failing to meet its anti-money laundering and countering the financing of terrorism, or AML/CFT,  requirements and that a significant risk of money laundering and terrorism financing can materialize, the AMLA will be able to request a European Commission decision to place this entity under its direct supervision for a limited period of time if the national financial supervisor did not take sufficient actions to remedy the situation of this entity; or
• Upon request of a national financial supervisory authority "in exceptional circumstances with the aim of addressing at Union level a heightened ML/TF risk or compliance failures at a non-selected obliged entity and to ensure a consistent application of high supervisory standards." In such a case, AMLA will assess the existence of circumstances justifying the transfer of supervision and may agree to assume direct supervision of the obliged entity for a limited period of time.

Direct Supervisory Powers

For selected obliged entities, AMLA will have enforcement and sanction powers and will be able to conduct both onsite and offsite inspections.

Joint supervisory teams will be established to carry out inspection activities, composed of staff from AMLA and financial sector supervisory bodies at national level. The composition and operation of joint supervisory teams will be regulated by technical implementing rules to be adopted.

In addition to supervisory powers and administrative measures, to ensure compliance, AMLA will have the power to impose pecuniary sanctions against the relevant selected obliged entity.