For years, gaps between prudential and AML supervision have left Europe’s financial sector vulnerable to regulatory arbitrage and illicit flows. The rise of innovative payment providers, the surge in crypto-asset services, and the ongoing transformation of banking technology have all expanded the attack surface for money launderers operating across borders.

The European Central Bank, responsible for prudential supervision under the Single Supervisory Mechanism (SSM), has steadily embedded AML/CFT considerations into its ongoing monitoring of banks. However, its remit stops short of direct AML investigations or enforcement. This limitation created a persistent gap—banks might be financially stable on paper, but exposed to reputational, operational, and legal risk due to insufficient AML/CFT controls.

AMLA-ECB Memorandum: A Turning Point for EU AML Supervision

The EU’s solution was to establish AMLA, an independent agency dedicated to anti-money laundering and countering the financing of terrorism (CFT) oversight. AMLA is designed to directly supervise certain high-risk financial institutions—referred to as “selected obliged entities”—that pose significant cross-border risks. These entities include large banks, payment service providers, and crypto-asset service providers with pan-European operations. Crucially, some of these organizations also fall under the prudential purview of the ECB.

The July 2025 Memorandum of Understanding sets a structured foundation for these two critical authorities to cooperate effectively. The MoU ensures regular information exchange, aligned supervisory approaches, and collaborative intervention in cases of major compliance breaches. By formalizing these channels, the agreement marks the end of fragmented, siloed AML oversight within the EU.

A New Regulatory Landscape: The EU AML Package and Article 92(3)

The ECB-AMLA agreement is not an isolated move. It is a direct requirement of the EU’s ambitious new anti-money laundering package adopted in 2024, which set out to transform the continent’s approach to fighting illicit finance. This package includes several legislative pillars: the EU AML Regulation (which is directly applicable across all member states), a sixth iteration of the AML Directive, and the founding regulation for AMLA itself.

Article 92(3) of the AMLA Regulation mandates the establishment of formal cooperation agreements between AMLA and the ECB. The intent is clear: Europe’s fight against financial crime demands that AML and prudential supervisors work hand in hand, leveraging each other’s expertise and mandates. This is a significant evolution from previous frameworks, which were often hindered by bureaucratic barriers, legal uncertainty, and inconsistent application of AML standards.

Under this regulatory framework, AMLA is empowered to take the lead on AML supervision of entities identified as posing the greatest cross-border risk. The ECB continues to focus on the overall soundness of significant banks within the euro area. Their cooperation ensures that AMLA’s risk-based approach is grounded in a deep understanding of the prudential context, and vice versa.

The MoU enables seamless information flow between the authorities, coordination of policy positions, and joint action on enforcement where necessary. The agreement also opens the door for AMLA and the ECB to observe each other’s board meetings when matters of mutual interest arise, supporting mutual learning and regulatory convergence.

The Mechanics of AMLA-ECB Cooperation and Information Sharing

Cooperation between AMLA and the ECB is not just about legal compliance or checking regulatory boxes. It is designed to deliver tangible improvements in supervision, risk management, and enforcement.

Key elements of the MoU include:

• Principles for Information Exchange: Both authorities are now required to share relevant information on the risk profiles, internal controls, governance structures, and compliance status of supervised entities. This encompasses not only routine supervisory data but also red flags identified in ongoing or special investigations.
• Joint Supervisory Actions: Where prudential and AML risks intersect—such as in cases of serious governance failings or suspected money laundering—AMLA and the ECB will coordinate supervisory measures. This might include joint on-site inspections, parallel assessments, and aligned recommendations to the management of supervised institutions.
• Sanctions and Enforcement: In situations involving severe AML/CFT breaches, the authorities will work together to consider restriction or withdrawal of licenses, business limitations, or other corrective measures. Consistent enforcement helps close regulatory loopholes and deters criminal exploitation of the financial system.
• Regular Policy Dialogue: The agreement creates formal mechanisms for policy coordination. AMLA and the ECB will meet regularly to align approaches on emerging risks, regulatory changes, and best practices for supervision. These meetings support a unified supervisory culture and rapid response to evolving threats.
• Observational Rights: Each authority can observe relevant board or committee meetings of the other. This fosters transparency, information sharing, and early identification of issues requiring joint attention.

By embedding these mechanisms into their daily operations, AMLA and the ECB are building a culture of trust and collaboration that transcends institutional boundaries.

Impact on Banks, Payment Providers, and Crypto-Asset Services

The implications of the AMLA-ECB cooperation extend far beyond regulatory headquarters in Frankfurt or the soon-to-be AMLA seat in Frankfurt or Paris (pending final confirmation). The new supervisory environment is already reshaping compliance expectations for a wide swath of financial institutions operating across the EU.

Banks:
Banks identified as “selected obliged entities” now face heightened direct AML supervision by AMLA, in addition to ongoing prudential oversight by the ECB. These institutions must demonstrate not only financial resilience but also robust, future-proof AML/CFT frameworks capable of managing cross-border risks. The cooperation agreement makes it far less likely that a bank can escape scrutiny due to gaps between authorities. Information sharing means warning signs will be acted on quickly, and compliance failings are less likely to slip through the cracks.

Payment and E-Money Institutions:
Payment service providers, including fast-growing fintechs, are now subject to much stricter controls when they operate across borders or process large volumes. AMLA is expected to focus on these players due to their exposure to rapid, high-volume transactions that can mask money laundering or terrorist financing activity. Coordination with the ECB ensures that prudential risks—such as those related to liquidity, solvency, or operational failures—are never assessed in isolation from financial crime risks.

Crypto-Asset Service Providers:
Perhaps the most transformative impact will be felt in the crypto-asset sector. AMLA’s new supervisory powers include direct oversight of major virtual asset service providers (VASPs) with pan-EU operations. The ECB, while not directly supervising crypto activity, will coordinate with AMLA where banks or payment providers have significant exposure to digital assets or partner with VASPs. The joint approach aims to prevent regulatory gaps and reduce the potential for money laundering through new technology.

Across all sectors, institutions must prepare for more regular inspections, deeper thematic reviews, and tougher sanctions for non-compliance. The days of fragmented supervision are drawing to a close, and firms operating at the intersection of traditional finance and innovation must treat AML/CFT risk management as a board-level priority.

A Step Toward a Consistent EU AML Regime

One of the long-standing challenges in European financial regulation has been the inconsistent application of AML/CFT rules. Despite successive directives and national laws, practical enforcement has varied significantly between member states, often due to differences in legal culture, regulatory priorities, and resources.

The AMLA-ECB cooperation agreement is a move toward a truly harmonized system. With AMLA acting as the single supervisor for the riskiest entities and the ECB integrating AML/CFT into prudential oversight, there is a clear path toward consistent standards and practices.

This harmonization is especially vital as financial services become ever more digital and borderless. Criminal networks exploit regulatory gaps between countries, shifting operations to jurisdictions with weaker controls. Unified EU supervision, backed by effective cooperation between AMLA and the ECB, is the most effective antidote to these risks.

Moreover, the MoU sets a precedent for other European and global authorities. It demonstrates the benefits of structured cooperation, shared intelligence, and joint action in tackling complex financial crime risks. As international AML/CFT standards evolve—driven by the Financial Action Task Force (FATF) and other global bodies—the EU’s new approach offers a template for others to follow.

Challenges and Future Developments

The success of the AMLA-ECB partnership will ultimately be measured by its effectiveness in identifying, preventing, and penalizing financial crime. Several challenges remain.

• Data Sharing and Privacy: Sharing sensitive supervisory data across institutions, and in some cases across borders, requires robust data protection and cybersecurity frameworks. The authorities must balance transparency with legal requirements under the General Data Protection Regulation (GDPR) and other privacy laws.
• Resource Allocation: Both AMLA and the ECB will need to invest in skilled personnel, advanced analytics, and IT infrastructure to support more complex, collaborative supervision.
• Jurisdictional Issues: While the EU AML Regulation is directly applicable, the practicalities of coordinating with national authorities, courts, and law enforcement agencies can introduce complexity and delay.
• Adapting to New Threats: Money laundering techniques continue to evolve, from digital asset misuse to sophisticated trade-based schemes. The AMLA-ECB MoU must be dynamic, with room to adapt joint supervision to emerging risks.

Nevertheless, the foundation has been set. As the EU’s regulatory landscape continues to mature, the partnership between AMLA and the ECB will be a critical pillar supporting the integrity of the financial system.

Conclusion: A New Era for AML Supervision in Europe

The July 2025 Memorandum of Understanding between AMLA and the ECB is more than an inter-agency agreement. It is a cornerstone for the next generation of financial crime supervision in Europe. By institutionalizing cooperation, information sharing, and policy alignment, the MoU supports a future where financial institutions are held to consistent, high standards across the EU.

For banks, payment service providers, and crypto-asset firms, the new regime signals the end of fragmented oversight and the beginning of an era where AML/CFT compliance is central to both prudential soundness and operational legitimacy. For the broader European market, it promises a more resilient and trustworthy financial ecosystem—one less vulnerable to abuse by criminals and better aligned with global best practices.

The partnership between AMLA and the ECB is set to be a defining feature of the EU’s fight against money laundering for years to come.

---

Related Links

• European Central Bank – Supervisory Policies and Guidance
• European Commission – Anti-Money Laundering Legislation
• Regulation (EU) 2024/1620 establishing the Authority for AML/CFT (AMLA)
• Single Supervisory Mechanism – ECB Banking Supervision
• MONEYVAL – EU Mutual Evaluation Reports

Other FinCrime Central Articles About AMLA

• How the European AMLA Will Transform Financial Crime Prevention
• Bruna Szego Named Chair of EU’s AMLA

Source: ECB

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 with us 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.