The EU wants to strengthen the fight against money laundering and is relying on a new Europe-wide authority. According to a vote by representatives of the European Parliament and the Council of Member States on Thursday, the European Anti-Money Laundering Authority will have its headquarters in Frankfurt. The majority of representatives from both institutions voted in favor of the city in Hesse, where the European Central Bank is already based. The authority will “play a key role in combating illegal financial activities in the EU,” said the Belgian Presidency. It is expected to start work in mid-2025 and have around 400 employees.
The institution, called Amla (Anti-Money Laundering Authority) after its English abbreviation, is the centerpiece of a multi-part legislative package against financial crime that the EU Commission had already proposed in mid-2021. For the first time, the EU is regulating the action against illegal financial flows in a regulation that directly applies in all member states. This should make it more difficult in the future to launder embezzled, extorted or stolen money within the international community. Part of the package were two other laws, including one that newly regulates the handling of crypto assets that are popular with criminals.
With the authority, the EU is primarily targeting money laundering cases in the financial sector. So far, national authorities have been monitoring whether banks are sufficiently prepared for customers who want to feed black money or profits from dark transactions into the legal financial circuit. In Germany, the Bafin is responsible for this. Financial institutions report suspected cases of money laundering to the Customs Financial Intelligence Unit (FIU). The responsibilities vary greatly depending on the member state.
In the future, Amla will be able to directly control large financial groups, investigate institutions on site and impose fines of up to ten million euros. The authority itself should determine who it supervises after a risk analysis. In a first step, there will be “up to 40” companies, the council announced in December. The national supervisors remain responsible for smaller banks, but the EU authorities are responsible for monitoring and coordinating their work.
In addition to Frankfurt, Rome, Vienna, Vilnius, Riga, Dublin, Madrid, Brussels and Paris also applied for the seat of the new authority. For the first time, public hearings were part of the process of selecting the location of a new EU agency. The European Court of Justice had given Parliament the same right to have a say as the member states in deciding where EU authorities should sit. On Thursday, the Council and Parliament voted for the first time in a new procedure, in which both institutions had 27 votes.
For Frankfurt, the award is an award. The location of an authority also sends a signal to the world for Germany: Look, we are a country with competence in this policy area. That worked well once. The ECB came to Frankfurt because Germany was considered a haven of price stability thanks to the sovereign work of the Bundesbank. Where else, if not on the Main, are European monetary authorities best domiciled?
A comparable argument does not apply when it comes to combating money laundering. Germany is considered a money laundering paradise; it is estimated that 100 billion euros in criminally earned money are put into real estate, companies and bank accounts every year and thus cleaned up. The fight against money laundering is going badly.
The Financial Intelligence Unit is an example of this: banks, real estate agents, notaries and jewelers report payments that seem strange to them. The agency has been involved in one scandal after another since it was relocated from the Federal Criminal Police Office to customs in 2017. At times, suspicious activity reports piled up in file folders without any clerk even taking notice. In 2018, the authority failed to pass on suspicious activity reports from Commerzbank that were directed against the now bankrupt financial group Wirecard. At the end of 2022, the then head of the FIU, Christof Schulte, resigned from his position. But his successor Daniel Thelesklaf soon had to deal with the fact that an FIU employee had passed on confidential information to a criminal clan for months.
In the 2022 Germany report, the experts from the highest international anti-money laundering body, the Financial Action Task Force (FATF), criticized the confusion of competences of over 300 authorities, saw deficits in the monitoring of cash smuggling and complained overall that Germany’s responsible authorities are doing far too little to prevent this Investigate and prosecute financial transactions of major crime syndicates.
At the public hearing, EU parliamentarians asked German representatives – including Federal Finance Minister Christian Lindner – critical questions. However, the new authority now has the status of an agency that reports directly to the European Commission. Germany’s weaknesses in combating money laundering were less of a counterargument compared to the city on the Main’s favorable location conditions.