As AMLA Takes Shape, ECB Signals a New Era of Coordinated Financial Crime Supervision

Key Takeaways

• AMLA Centralizes AML Supervision: The new EU authority will reduce national fragmentation and assume direct oversight of higher-risk institutions from 2028.
• Financial Crime Is a Prudential Risk: Weak AML controls can expose banks to governance, operational, legal and reputational risks that threaten safety and soundness.
• ECB and AMLA Formalize Cooperation: A 2025 Memorandum of Understanding sets the framework for information exchange, policy coordination and supervisory alignment.
• Digitalization Raises Both Risk and Opportunity: Cyber-enabled fraud and crypto-asset activity heighten exposure, while artificial intelligence offers enhanced detection tools.
• Implementation Is the Next Test: The effectiveness of Europe’s new AML architecture will depend on coordinated, risk-based execution rather than formal agreements alone.

Deep Dive

Europe’s long-promised reset of anti-money laundering supervision is moving from legislative text to lived reality. Speaking in Frankfurt on Tuesday, Claudia Buch, Chair of the Supervisory Board of the European Central Bank, used a policy workshop to lay out what the arrival of the European Anti-Money Laundering Authority actually means in practice.

The workshop, hosted at the European University Institute, was the first joint event between the ECB and AMLA since the new authority was formally established last year. That timing, Buch suggested, was no coincidence. Banks are operating against a backdrop of heightened geopolitical risk and accelerating digital transformation. Those forces have reshaped how money moves and how it can be abused.

Money laundering risk is no longer a parallel compliance track. It is embedded in the core prudential conversation about bank resilience.

When Financial Crime Becomes a Safety and Soundness Issue

The ECB does not directly supervise banks for anti-money laundering compliance. That responsibility sits with designated AML and counter-terrorist financing authorities. But Buch was clear that this formal division of labor does not insulate prudential supervisors from the consequences of failure.

Weak controls against money laundering and terrorist financing often reveal deeper governance cracks. They can spill into credit, legal and operational risk. They can corrode reputations. In extreme cases, they can undermine a bank’s viability. That is why, under the European framework, prudential supervisors are required to assess the prudential implications of money laundering and terrorist financing risks, even if they are not the primary enforcers of AML rules.

This integration has been evolving for years. In 2019, the ECB and roughly 50 national AML authorities across the European Economic Area agreed on arrangements for exchanging information. In 2018, ECB Banking Supervision created a dedicated horizontal coordination function to centralize expertise and ensure that money laundering risks are consistently reflected in supervisory work, including within the Supervisory Review and Evaluation Process.

The legal foundation was reinforced by the Capital Requirements Directive V, which clarified the role of prudential supervisors in acting on AML-related information. But as Buch emphasized, law and memoranda only go so far. The real test is whether authorities can translate that framework into day-to-day coordination without overwhelming institutions with overlapping demands.

AMLA and the End of Fragmentation

AMLA’s creation is designed to address one of Europe’s persistent weaknesses: fragmentation.

For decades, anti-money laundering supervision in the European Union was organized primarily at national level, sometimes split across multiple sectoral authorities. That structure created uneven practices and, at times, inconsistent standards. Criminal networks are adept at identifying such seams.

From 2028, AMLA will assume direct supervisory responsibility for credit and financial institutions with higher risk profiles. Buch drew a clear parallel to the Single Supervisory Mechanism in banking supervision. Just as the SSM was created to drive consistency and convergence in prudential oversight, AMLA is intended to harmonize the AML and counter-terrorist financing landscape.

The ECB and AMLA signed a Memorandum of Understanding in June 2025 setting out a framework for cooperation on policies, supervisory standards and the use of powers. Both institutions are based in Frankfurt, a practical advantage. But Buch stressed that geography alone will not ensure alignment. Coordination mechanisms must be deliberate, structured and efficient, particularly where both authorities are examining the same institutions and underlying risks.

The aim, she said, is clarity and predictability, not duplication.

Digitalization’s Double Edge

If fragmentation is the structural challenge, digitalization is the environmental one.

Buch described a financial system in which payments can cross borders in seconds, sometimes anonymously. New forms of fraud are proliferating. Cyberattacks have grown more frequent and severe. The crypto-asset sector, in particular, presents heightened money laundering and terrorist financing risks due to its cross-border nature, technological complexity and the potential anonymity of transactions.

AMLA is expected to focus on higher-risk sectors, including crypto-asset service providers. Divergent national approaches to registration and authorization, Buch noted, have contributed to supervisory inconsistencies and the risk of firms gravitating toward jurisdictions perceived as having lighter controls.

For prudential supervisors, the issue is not theoretical. Crypto-asset service providers are increasingly interconnected with banks through payment rails, custody services and group structures. Weaknesses in AML controls in one corner of the system can migrate into broader prudential vulnerabilities.

At the same time, digital tools are not solely a source of risk. Banks are deploying artificial intelligence to detect suspicious patterns earlier and improve monitoring. ECB Banking Supervision, Buch said, engages with institutions on their use of AI and other technologies, encouraging innovation while maintaining a cautious eye on governance and control risks. The ECB has also developed supervisory technology tools to enhance its own processes and signaled openness to sharing such capabilities with other authorities.

A Risk-Based Model Under Pressure

Since 2023, the ECB has pursued a reform agenda aimed at making European banking supervision more effective, efficient and risk-based. The focus has been on sharpening priorities, integrating supervisory activities and applying proportionality without diluting standards.

AMLA, as a new EU-level authority, will face similar pressures. Supervisory resources are finite. Risk landscapes are not. Buch referenced recommendations from the International Monetary Fund’s recent Financial Sector Assessment Program calling for a holistic approach to risk classification and a harmonized AML supervisory methodology, developed in close coordination with prudential and financial stability authorities.

The ECB supports that direction, she said, and stands ready to contribute its experience.

Implementation Now Matters

The architecture is largely in place. The legal framework has been updated. The Memorandum of Understanding is signed. The institutional lines are drawn.

What remains is implementation.

For the ECB, that means smoothing information exchange in daily supervision, coordinating planning where mandates intersect and ensuring that Joint Supervisory Teams can assess the prudential implications of AML weaknesses with clarity and consistency.

AMLA’s establishment changes Europe’s operating model for combating financial crime. If cooperation works as intended, supervision will become more coherent and less fragmented, without softening standards or weakening resilience.

Money laundering risk is no longer a compartmentalized compliance concern. It sits squarely within the prudential frame, tied to governance, culture and long-term viability.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.