The EU AML Package

The new EU Supervisory Authority and its competences

One of the most significant changes that the AML Package introduces is the creation of a new Authority for Anti-Money Laundering and Countering the Financing of Terrorism ("AMLA"). The authority will centrally coordinate the activities of national authorities, contributing to the development of consistent and uniform market practice. In addition it will assist individual national authorities with their analysis, contributing to the improvement of the collection of financial intelligence - a key material for law enforcement authorities.

The AMLA will focus on the following areas:

• introducing an integrated AML/CFT supervisory system across the EU based on unified supervisory methodologies and standards;

• direct supervision of the most risky financial institutions that operate in a large number of Member States or in respect of those in which immediate action may be required in order to limit AML/CFT risks;

• monitoring and coordinating the activities of national supervisory authorities responsible for both financial and non-financial entities;

• promoting cooperation between national FIUs and facilitating coordination of their work as well as joint analysis in order to improve the detection of illicit cross-border financial flows.

AML Rulebook - what is it and what “technical standards” will consist of?

The term "single AML Rulebook" refers to the unification of the regulatory framework for the prevention of money laundering and terrorist financing. This will be done by introducing, at the European level, regulations that will be directly and uniformly applied by the obliged institutions in all EU Member States. This approach is the reflection of the draft regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing submitted as part of the AML Package - the AML Rulebook. Rules introduced on the basis of the AML Rulebook will be more detailed and precise in relation to the current regulations (introduced on the basis of directives). 

The AML Rulebook will be complemented by regulatory technical standards, which in the future will be issued by AMLA , e.g. on the application of due diligence measures. Within such a framework, Member States will still have the possibility to react to threats specific to them, such as by indicating at national level additional sectors requiring AML/CFT rules when justified by specific threats.

Supervision of obliged institutions

The EU AML Package also includes the establishment of the Authority for an Anti-Money Laundering and Countering the Financing of Terrorism (AMLA), whose tasks will include overseeing cooperation between the relevant national supervisory authorities. Until now, such a role was played by the European Banking Authority however the European Parliament concluded that more human and financial resources should be allocated to the fight against money laundering and terrorist financing, thus decided to create an authority that will coordinate AML/CFT supervision at the European level.

AMLA will develop a comprehensive supervision methodology, including specific guidelines, technical standards and recommendations reflecting a risk-based approach. 

In turn, local supervisors should be responsible for risk-based-supervision. The frequency and content of the inspections of obliged institutions will depend on the risk profile of the institution and types of ML/TF risks present in that country. By 31st October each year, national supervisors should have prepared annual inspection programmes (Article 9 of the Regulation regarding AMLA) and submitted them to the AMLA.

Individual supervisory authorities will also have to develop thematic controls (dedicated to specific obliged institutions). The exchange of information from such thematic inspections is to include any joint conclusions or coordinated actions from other supervisors. Secondments will also be supported within different supervisory authorities as a way to exchange experience through short-term visits. The establishment of a central AML/CFT database is also expected.

Furthermore, for financial institutions that are part of a larger group, Member States are to ensure that the financial supervisory authorities of the home and host Member States cooperate as much as possible, regardless of their nature or status. In addition this is to be done through cooperation with the AMLA.

The 6th AMLD also contains rules on the establishment of AML/CFT supervisory colleges (Observations on AML/CTF colleges). The AML/CFT supervisory colleges will serve as a way to exchange information for the purpose of supervising credit or financial institutions, provided they operate in at least three Member States or outside of the European Union. The colleges are to be used to exchange information, provide mutual assistance and coordinate supervisory approaches to institutions, including taking proportionate measures in the event of identified violations. The AMLA is also to participate in the meetings of the colleges.

Changes to the EU high-risk countries list and its connection to the FATF list

The Commission will review the approach to those countries that it identifies as “third countries” (i.e. countries outside the EU). 

The list of high-risk third countries is to be integrated with those lists set by the international standards of the FATF (Financial Action Task-Force), linking the FATF "black list" with the European Commission list (Jurisdictions Subject to a call for action) as well as with the FATF "grey list", a list of countries that should be subject to increased monitoring (Jurisdictions under Increased Monitoring).

The Commission also reserves the right to draw up a list of countries that it determines pose a risk to the EU financial system, not linked with the FATF lists. All clients from countries on these lists would be subject to enhanced standards of due diligence.