The fight against money laundering and terrorist financing is entering a transformative phase in the European Union. As financial crimes evolve in complexity, the European Commission has responded with an ambitious and sweeping set of reforms designed to harmonize anti-money laundering (AML) efforts across the EU. Central to these reforms is the creation of the new Anti-Money Laundering Authority (AMLA), slated to begin operations in 2025.
This blog explores the key pillars of the EU’s AML reform package, the operational role of AMLA, and what compliance professionals must do today to prepare for this regulatory shift.
What Is AMLA?
The Anti-Money Laundering Authority (AMLA) is a new EU body that will be headquartered in Frankfurt, Germany. It was formally established through the AML legislative package adopted in 2024.
The authority’s main responsibilities include:
- Direct supervision of certain high-risk cross-border financial institutions
- Coordinating national AML supervisory authorities to ensure consistent application of EU rules
- Supporting cooperation among Financial Intelligence Units (FIUs) across member states
- Imposing sanctions and ensuring compliance with the AML/CFT (Countering the Financing of Terrorism) framework
AMLA is expected to become operational in 2025 and begin direct supervision activities by 2026.
Key Elements of the EU AML Package
The AML Package is comprised of four major components:
- A Single EU Rulebook – This replaces fragmented directives with a directly applicable regulation across all EU member states, ensuring consistency.
- A Sixth AML Directive – Updates and strengthens national supervisory powers and improves coordination between national FIUs.
- The Creation of AMLA – Establishes a central supervisory authority to enforce uniform standards and best practices.
- A Revised Transfer of Funds Regulation – Enhances the traceability of crypto asset transactions and brings them in line with international recommendations.
New Customer Due Diligence (CDD) Requirements
One of the most impactful changes for financial institutions is the overhaul of Customer Due Diligence (CDD) obligations. Key updates include:
- Stricter Beneficial Ownership Checks: Firms will be required to verify beneficial ownership using real-time, interconnected national registries.
- Enhanced Due Diligence for High-Risk Third Countries: Institutions must apply a risk-based approach aligned with global blacklists and EU assessments.
- Harmonized Thresholds: A consistent threshold of €10,000 is set for occasional transactions triggering CDD obligations.
- Crypto Asset Monitoring: Service providers dealing with crypto assets are now under AML regulations, with KYC checks required for transactions exceeding €1,000.
These requirements necessitate both procedural updates and technological investment across compliance teams.
What Compliance Teams Must Do Now
1. Assess and Align Risk Frameworks
Organizations should begin by conducting a comprehensive gap analysis to determine where their current AML policies diverge from upcoming regulations. Updated risk assessments, training programs, and procedural documentation should follow.
2. Invest in Technology and Automation
Modernizing AML infrastructure is no longer optional. Financial institutions should prioritize investments in transaction monitoring tools, identity verification systems, and regtech platforms that use machine learning to detect suspicious activity.
For example, major banks are already adopting AI-driven solutions to improve transaction screening and reduce false positives—enabling compliance teams to focus on truly anomalous behavior.
3. Integrate and Centralize Data Systems
To keep pace with real-time compliance expectations, institutions must break down data silos. A centralized platform that integrates customer onboarding, risk scoring, and transaction monitoring enables faster, more effective due diligence.
4. Engage with National and European Supervisors
Now is the time to build proactive relationships with national regulators and begin preparing for future oversight from AMLA. Participation in regulatory consultations, industry roundtables, and cross-border AML forums can help institutions anticipate expectations and foster trust.
Implications for Cross-Border Financial Institutions
Institutions with cross-border operations will be under particular scrutiny. These firms are first in line for direct AMLA supervision and must operate under harmonized compliance standards. Inconsistent practices or jurisdictional loopholes will no longer be tolerated.
This centralization mirrors the introduction of the Single Supervisory Mechanism in the banking sector, which raised the bar for consistency and transparency. AMLA aims to bring the same level of cohesion to financial crime compliance.
Looking Ahead: 2025 and Beyond
With AMLA becoming operational in 2025 and the full AML package taking effect in 2026, financial institutions should treat 2024 as a critical preparation window. Those that act now will gain a competitive advantage—not only through regulatory compliance but by building systems that foster greater customer trust and operational resilience.
Final Thoughts
The EU’s new AML framework is designed to close loopholes, harmonize rules, and better protect the financial system from abuse. But the responsibility to implement and uphold these new standards lies with the institutions on the ground.
For compliance officers, this is a pivotal moment. Adapting early to AMLA’s expectations and the broader AML package will not only ensure alignment with future regulations but position your organization as a leader in financial integrity.
