An exclusive article by Fred Kahn

Europe’s investment of millions in AMLA was meant to signal a new era in the fight against money laundering. Instead, the lack of visible progress is fueling frustration among professionals and legislators who now question whether the authority is more ambition than substance.

Anti–money laundering frameworks have been in place for decades, yet criminals continue to exploit weak supervision, national fragmentation, and loopholes across borders. The Financial Action Task Force, despite its global reach and technical expertise, has struggled to deliver consistent enforcement. The EU’s response is unprecedented: the creation of the Anti-Money Laundering Authority (AMLA), a centralized regulator with powers to oversee national supervisors, directly supervise risky institutions, and coordinate the fight against illicit finance. Whether AMLA becomes a transformative solution or just another bureaucratic layer is the billion-euro question now confronting compliance professionals, regulators, and financial institutions.

The unresolved FATF problem and the European impulse

FATF was built to set global standards and monitor compliance, but it was never designed to operate as a hard enforcer. Its model is based on peer evaluations and public pressure rather than binding rules. This approach has delivered uneven results. Some jurisdictions responded with robust frameworks, while others dragged their feet, watered down implementation, or lacked the political will to confront entrenched networks. Even countries with strong reputations often tolerated weak supervision of sectors like real estate, luxury goods, and free trade zones.

For Europe, these shortcomings became impossible to ignore. A string of major scandals involving Baltic banks, Russian capital inflows, and vast cross-border laundering networks shook public confidence. Despite FATF’s presence, tens of billions in illicit flows coursed through European institutions each year. Investigations revealed that suspicious activities were often flagged but not acted upon, or that different regulators operated under incompatible standards. The consequences were not just financial but political: fragmented enforcement eroded trust in the single market, created reputational risks for the eurozone, and threatened geopolitical stability.

The European Union decided that relying on national supervisors under FATF’s general framework was no longer enough. Instead of coordination through recommendations, it chose centralization backed by EU law. AMLA represents that leap, promising binding authority, cross-border oversight, and uniformity where FATF’s consensus model could not deliver.

Design and timing of AMLA promise and ambiguity

AMLA is structured as a fully independent EU authority with headquarters in Frankfurt. Its mandate rests on three main pillars: supervising the supervisors, directly overseeing the riskiest financial institutions, and coordinating with financial intelligence units. On paper, this model is revolutionary. It shifts anti–money laundering from fragmented domestic enforcement to a centralized European structure with legal force.

The timing, however, is delicate. AMLA is already operational in terms of structure and governance, but its real powers will not bite for several years. Direct supervision of cross-border institutions is scheduled to begin only in 2027, and the list of supervised entities will not be finalized until then. Budgets and staff allocations remain modest compared to the scale of the challenge. While ambitious targets call for hundreds of specialists, many positions are still vacant, and the authority is in the middle of building its internal culture and methodology.

This long lead time creates uncertainty. Critics point out that criminal networks will not wait until 2027 to exploit loopholes. Every year of delay risks another wave of scandals, fines, and political fallout. Others argue that the gradual approach is necessary to avoid repeating mistakes of other EU agencies, where hasty implementation led to overlapping mandates and institutional rivalries. The balance between urgency and preparedness defines the fragile credibility of AMLA’s early phase.

What could derail centralization and what might redeem it

Centralization is not a magic bullet. Several challenges could undermine AMLA before it gains real traction.

One obstacle is resistance from national supervisors. Regulators in major member states have built entire institutions around AML supervision, and they are reluctant to surrender authority. When AMLA attempts to impose standards, disputes over sovereignty and accountability could escalate. If a major institution is sanctioned by Frankfurt, national governments may feel bypassed or exposed. This tension risks undermining cooperation unless AMLA can build a culture of shared ownership.

Another challenge is data fragmentation. Effective AML supervision depends on high-quality, timely, and standardized data. Yet Europe’s financial intelligence units and reporting systems remain uneven. Some countries operate advanced platforms, while others still rely on outdated or manual processes. AMLA will need to create interoperability across dozens of jurisdictions and systems, a task that requires not just technology but also harmonization of legal and privacy frameworks.

A third obstacle is resources versus scale. Even with hundreds of staff and a sizable budget, AMLA faces a financial system of tens of thousands of institutions, trillions in annual flows, and complex laundering typologies evolving every day. If the authority becomes bogged down in paperwork, risk assessments, or procedural disputes, it could lose credibility as quickly as FATF.

There is also the risk of regulatory capture. Large institutions with political influence may seek to soften AMLA’s stance or lobby for favorable interpretations. Unless transparency and accountability are built into the authority’s DNA, AMLA could become another symbolic layer rather than a genuine deterrent.

Despite these dangers, AMLA has advantages that FATF never enjoyed. Its powers are grounded in EU regulation, making them legally binding. It has the authority to impose fines, restrict operations, and withdraw licenses. By directly supervising cross-border institutions, it can focus on systemic players rather than leaving responsibility to national supervisors with limited capacity. Its cooperation agreements with the European Central Bank and other agencies provide institutional muscle that FATF’s peer-based model lacked. If AMLA uses these strengths to set clear precedents early—through decisive action against major breaches—it could rapidly build legitimacy.

Why the early silence and what must happen next

Since its official launch, AMLA has been criticized for a lack of visibility. For compliance officers and financial institutions, silence translates into uncertainty. Businesses are unsure how supervision will be conducted, how reporting will change, or what standards will apply across jurisdictions. Without communication, firms may delay investment in compliance or hedge their strategies.

This silence reflects the authority’s transitional phase, but perception matters. To maintain credibility, AMLA must demonstrate progress even before full powers take effect. Early priorities could include publishing methodological papers, issuing preliminary supervisory guidelines, and hosting consultations with industry stakeholders. AMLA could also initiate pilot assessments with selected institutions to signal what direct supervision will look like.

Visibility is not just about communication with the industry. It is also about public trust. Money laundering scandals erode confidence in banks and institutions, and citizens want to know that authorities are taking action. By showing transparency in staffing, budgets, and planning, AMLA can reassure the public that it is more than a symbolic gesture.

For AMLA to succeed, the next few years are critical. It must simultaneously build institutional credibility, integrate diverse national frameworks, and demonstrate tangible results. Any failure in this window could cement perceptions of it as another ambitious but ineffective European project.

---

Related Links

• Regulation (EU) 2024/1620 establishing AMLA
• European Commission AML and CFT reforms
• Guidelines on ML/TF risk factors | European Banking Authority
• ECB and AMLA sign agreement on cooperation

Other FinCrime Central Articles About AMLA

• AMLA expects high standards against financial crime in crypto sector
• Agreement Signed between AMLA and ECB to Strengthen EU Anti-Money Laundering Regime
• How the European AMLA Will Transform Financial Crime Prevention

Some of FinCrime Central’s articles may have been enriched or edited with the help of AI tools. It may contain unintentional errors.

Want to promote your brand, or need some help selecting the right solution or the right advisory firm? Email us at info@fincrimecentral.com; we probably have the right contact for you.