FantasticSearch

(1) Experience with the current anti-money laundering and countering the financing of terrorism (AML/CFT) framework, which relies heavily on the national implementation of AML/CFT measures, has disclosed weaknesses not only with regard to the efficient functioning of that framework of the Union but also with regard to integrating international recommendations. Those weaknesses have led to the emergence of new obstacles to the proper functioning of the internal market, both due to risks within the internal market as well as external threats facing it.

(2) The cross-border nature of crime and criminal proceeds endangers the efforts of the Union financial system with regard to the prevention of money laundering and financing of terrorism. It is necessary to enhance those efforts at Union level through the creation of an authority responsible for contributing to the implementation of harmonised rules in that domain. In addition, such an authority should pursue a harmonised approach to strengthen the Union’s existing preventive AML/CFT framework and specifically AML/CFT supervision and cooperation between Financial Intelligence Units (FIUs). That approach is intended to reduce divergences in national legislation and supervisory practices and introduce structures that benefit the smooth functioning of the internal market in a determined manner and should, consequently, be based on Article 114 of the Treaty on the Functioning of the European Union (TFEU).

(3) Therefore, a Union authority for anti-money laundering and countering the financing of terrorism (‘the Authority’) should be established. The creation of the Authority is crucial for ensuring the efficient and adequate supervision of obliged entities that pose a high risk with regard to money laundering/terrorist financing (‘ML/TF’), strengthening common supervisory approaches for all other obliged entities, and facilitating joint analyses and cooperation between FIUs.

(4) This Regulation is part of a comprehensive package that aims to strengthen the Union’s AML/CFT framework. Together, this Regulation, Regulation (EU) 2023/1113 of the European Parliament and of the Council , Regulation (EU) 2024/1624 of the European Parliament and of the Council and Directive (EU) 2024/1640 of the European Parliament and of the Council will form the legal framework governing the AML/CFT requirements to be met by obliged entities and underpinning the Union’s AML/CFT institutional framework.

(5) To bring AML/CFT supervision to an efficient and uniform level across the Union, it is necessary to provide the Authority with the following powers: direct supervision of a certain number of selected obliged entities in the financial sector, including crypto-asset service providers; monitoring, analysis and exchange of information concerning ML/TF risks affecting the internal market; coordination and oversight of AML/CFT supervisors of the financial sector; coordination and oversight of AML/CFT supervisors of the non-financial sector, including self-regulatory bodies; and the coordination and support of FIUs.

(6) Combining both direct and indirect supervisory competences in relation to obliged entities, and also providing a support and coordination mechanism for FIUs, is the most appropriate means of bringing about AML/CFT supervision and cooperation between FIUs at Union level. It is therefore necessary that the Authority combines independence and a high level of technical expertise and is established in line with the Joint Statement and Common Approach of the European Parliament, the Council of the European Union and the European Commission of 19 July 2012 on decentralised agencies.

(7) The arrangements concerning the seat of the Authority should be laid down in a headquarters agreement between the Authority and the Member State where its seat is located. The headquarters agreement should stipulate the conditions of establishment of the seat and the advantages conferred by that Member State on the Authority and its staff. The headquarters agreement should be concluded in a timely manner before the Authority begins its operations.

(8) When selecting the seat of the Authority, the European Parliament and the Council are to ensure that, given the nature of the Authority, its location enables it to fully execute its tasks and powers, to recruit highly qualified and specialised staff, to offer adequate training opportunities for AML/CFT activities, and, where relevant, to closely cooperate with Union institutions, bodies, offices and agencies; and, in order to avoid reputational risks, the European Parliament and the Council are to consider, based on publicly available, relevant and comparable information, such as reports of the Financial Action Task Force (FATF), how ML/TF risks are adequately addressed in the Member State where the seat will be located. In addition, the European Parliament and the Council are to take into account the following criteria for the selection of the Authority’s seat: an assurance that the Authority can be set up on site upon the entry into force of this Regulation; the accessibility of the location; the existence of adequate education facilities for the children of staff members; appropriate access to the labour market, social security and medical care for both children and spouses of staff members; and geographical balance. Considering those criteria, the Authority should have its seat in Frankfurt am Main, Germany.

(9) The powers of the Authority aim to allow it to improve AML/CFT supervision in the Union in various ways. With respect to selected obliged entities, the Authority should ensure group-wide compliance with the requirements laid down in the AML/CFT framework and any other legally binding Union acts that impose AML/CFT-related obligations on financial institutions. With respect to financial supervisors, the Authority should in particular carry out periodic reviews to ensure that all financial supervisors perform their tasks adequately. It should also investigate systematic failures of supervision resulting from breaches, or the non-application or incorrect application, of Union law. With respect to non-financial supervisors, including self-regulatory bodies where appropriate, the Authority should coordinate peer reviews of supervisory standards and practices and request non-financial supervisors to ensure the observance of AML/CFT requirements in their sphere of competence. The Authority should be able to act in cases of potential breaches or non-application of Union law by non-financial supervisors and, where such breaches are not rectified in line with the Authority’s recommendations, it should issue warnings to the affected counterparties of the non-financial supervisors. The Authority should facilitate the functioning of the AML/CFT supervisory colleges in both the financial and non-financial sectors. Overall, the Authority should contribute to the convergence of supervisory practices and the promotion of high supervisory standards. In addition, the Authority should coordinate and support the conduct of joint analyses by FIUs, or request the launch of joint analyses, and should make IT and artificial intelligence services available to FIUs to enhance their data analysis capabilities, as well as tools for secure information sharing, including through the hosting of FIU.net, the dedicated IT system allowing FIUs to cooperate and exchange information with each other and, where appropriate, with their counterparts from third countries and third parties.

(10) With a view to strengthening AML/CFT rules at Union level, enhancing the clarity of those rules while ensuring consistency with international standards and other legislation, and increasing the efficiency of the implementation of AML/CFT measures, including in the non-financial sector, it is necessary to establish the coordinating role of the Authority at Union level in relation to obliged entities in both the financial and the non-financial sectors for the purposes of assisting national supervisors and promoting supervisory convergence. Consequently, the Authority should be mandated to prepare draft regulatory and implementing technical standards and to adopt guidelines, recommendations and opinions with the aim of ensuring that, where supervision remains at national level, the same supervisory practices and standards apply in principle to all comparable entities. In addition, the Authority should be tasked with monitoring and measuring the degree of convergence and the consistent application of legal requirements and high supervisory standards by supervisory authorities and obliged entities. The Authority should be entrusted, due to its highly specialised expertise, with the development of a supervisory methodology in line with a risk-based approach. Certain aspects of the methodology, which can incorporate harmonised quantitative benchmarks, such as approaches for classifying the risk profile of obliged entities, including their inherent and residual risk profiles, should be detailed in directly applicable binding regulatory measures — regulatory or implementing technical standards — taking into account ML/TF risks in prudential supervision, in order to ensure effective interaction between AML/CFT supervision and prudential supervision. Other aspects of the methodology, which require wider supervisory discretion, such as approaches to assessing the internal controls of obliged entities, should be covered by non-binding guidelines, recommendations and opinions of the Authority. The harmonised supervisory methodology should take due account of and, where appropriate, leverage existing supervisory methodologies relating to other aspects of supervision of obliged entities in the financial sector, especially where there is interaction between AML/CFT supervision and prudential supervision. More specifically, the supervisory methodology to be developed by the Authority should complement the guidelines and other instruments developed by the European Supervisory Authority (European Banking Authority) (EBA) established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council detailing the approaches of prudential supervisory authorities with respect to taking into account ML/TF risks in prudential supervision, in order to ensure effective interaction between AML/CFT supervision and prudential supervision. A harmonised supervisory methodology would also enable the development of common supervisory tools for interactions with, and data requests from, obliged entities across the entire supervisory system. The Authority should be able to coordinate the development of such tools in the form of structured questionnaires, based online or offline, and integrated into a single platform for interaction with obliged entities and among supervisors within the system. Such a platform would not only facilitate supervisory processes and harmonised supervisory approaches, but also avoid duplicative reporting requirements and the imposition of an excessive burden on obliged entities under supervision whether at Union or at national level.

(11) The extension of money laundering’s predicate offences to include the non-implementation and evasion of targeted financial sanctions requires the development of an understanding of threats and vulnerabilities in that area at the level of obliged entities, supervisors and the Union. In carrying out its supervisory tasks in relation to selected obliged entities, the Authority should therefore ensure that those entities have in place adequate systems to implement requirements related to targeted financial sanctions. Similarly, given its central role in ensuring an effective supervisory system across the internal market, the Authority should support supervisory convergence in that area to ensure adequate oversight of the compliance of credit institutions and financial institutions with requirements related to the implementation of targeted financial sanctions. The information collected through the Authority’s supervisory and convergence tasks constitutes a resource for the Union’s understanding of risks in relation to the non-implementation and evasion of targeted financial sanctions, and can contribute to the identification of effective mitigating measures. To that end, the Authority should contribute its experience and knowledge to the development of a risk assessment at Union level in relation to the non-implementation and evasion of targeted financial sanctions.

(12) The Authority should be entrusted with the development of draft regulatory technical standards in order to complete the harmonised rulebook established in Regulation (EU) 2023/1113, Regulation (EU) 2024/1624 and Directive (EU) 2024/1640. The Commission should be empowered to endorse draft regulatory technical standards by means of delegated acts pursuant to Article 290 TFEU in order to give them binding legal effect.

(13) The Authority should be entrusted with the development of draft implementing technical standards where needed to ensure uniform conditions for the implementation of this Regulation. The Commission should be empowered to adopt implementing technical standards by means of implementing acts pursuant to Article 291 TFEU.