EU Anti-Money Laundering Authority Begins Operations in Frankfurt
AMLA, the EU's Anti-Money Laundering Authority, started operations in Frankfurt on 1 July 2025. On 1 January 2026, the European Banking Authority completed the transfer of all AML/CFT mandates and functions to AMLA, marking the point at which AMLA became the EU's central authority for anti-money laundering supervision. It has a mandate to directly supervise the highest-risk financial institutions across the bloc, coordinate 27 national Financial Intelligence Units, and develop binding technical standards for AML compliance. Whether it delivers on any of that within a useful timeframe is a different question entirely.
What AMLA is supposed to do
The authority has two core functions. First, it will directly supervise a selected group of obliged entities deemed highest-risk, around 40 financial institutions including banks, payment firms, and crypto-asset service providers with significant cross-border exposure. The selection criteria focus on the volume of cross-border activity, the risk profile of the customer base, and past supervisory findings. The AMLA website outlines the selection process: AMLA will begin identifying the first batch of entities from July 2027, with direct supervision starting on 1 January 2028.
Second, AMLA will coordinate and support national FIUs (Financial Intelligence Units), which remain responsible for receiving and analyzing suspicious transaction reports in each member state. This coordination role matters because FIU effectiveness varies wildly across the EU. Germany's FIU was famously overwhelmed by a backlog of over 100,000 unprocessed reports in 2020. Italy's is well-resourced. Estonia's was caught off guard by the Danske Bank scandal. AMLA's job is to bring the lagging units closer to the standards of the best performers, though it cannot compel national governments to fund their FIUs adequately.
Budget, staffing, and timeline
AMLA's 2025 budget was approximately EUR 17.2 million, covering initial staffing, IT procurement, and office costs during the setup phase. By 2028, when direct supervision begins, the annual budget is projected to reach approximately EUR 92 million, funded by a mix of fees from supervised entities (around EUR 65 million) and EU budget contributions (around EUR 27 million). Staffing stood at roughly 120 by end of 2025, with approximately 233 targeted by end of 2026 and a full capacity of 432 by end of 2027. For context, the European Banking Authority (EBA), which transferred its AML mandate to AMLA, has a 2026 staffing plan for 263 staff and a budget of approximately EUR 64.4 million. AMLA is building a new institution from scratch while simultaneously developing the rulebook it will enforce.
The timeline is ambitious. AMLA must finalize regulatory technical standards throughout 2026 (delivering 24 of its 40 mandates this year alone), begin indirect supervision (overseeing national supervisors) in early 2027, and select entities for direct supervision from July 2027, with direct supervision launching on 1 January 2028. The European Commission has expressed confidence in the schedule, but EU agency launches routinely slip. The European Labour Authority, for comparison, took roughly five years from its 2019 establishment to reach full operational capacity in 2024.
Will it actually work?
The skeptical case is straightforward. Europe does not lack AML rules. It lacks enforcement. The Fifth and Sixth Anti-Money Laundering Directives already required member states to implement detailed AML frameworks, beneficial ownership registers, and enhanced due diligence for high-risk situations. The problem was always that national supervisors applied these rules inconsistently, under-resourced FIUs couldn't process the reports they received, and political will to pursue domestic banks varied by country.
Adding a supranational agency on top of 27 national supervisory regimes creates coordination costs. Every supervisory decision involving a cross-border institution will now require interaction between AMLA and one or more national authorities. If those relationships work smoothly, AMLA could genuinely improve consistency. If they become turf battles (and EU institutional turf battles are a well-documented phenomenon), the result is another layer of process with no improvement in outcomes.
The optimistic case rests on AMLA's direct supervision power. For the 40 entities under its direct authority, AMLA eliminates the problem of reluctant national supervisors. It can conduct inspections, impose requirements, and escalate to penalties without waiting for a national authority to act. If AMLA's direct supervision produces visible results, catching problems that national supervisors missed, it builds credibility and political support for expanding its mandate.
Frankfurt won the seat competition partly because of proximity to the ECB and Germany's large financial sector. The location choice was political, but it does place AMLA near the ECB's banking supervision arm (the SSM), which should simplify coordination for jointly supervised institutions. Whether physical proximity translates to operational cooperation is something that will only become clear over the next two to three years.
For compliance teams at financial institutions: the immediate impact is minimal. AMLA's direct supervision doesn't begin until 1 January 2028, and only for the 40 selected entities. The indirect effects, particularly new binding technical standards that will replace the current patchwork of national guidelines, will take until 2028-2029 to materialize. In the meantime, national AML rules still apply, national supervisors still conduct examinations, and the existing compliance burden hasn't decreased. It may eventually increase once AMLA's standards layer on top of national requirements.
