INSIGHT: Read EBF’s Roger Kaiser address to ‘Compliance Council’ roundtable at European Parliament

By Roger Kaiser, Head of Tax & Compliance at the European Banking Federation

FOR over a decade, the EU’s anti-money laundering (AML) system has been hampered by fragmentation, reactive policymaking, and vulnerability to abuse.

A series of financial scandals since 2016 have underscored the urgent need for reform. The EU’s response is the creation of AMLA (the European Anti-Money Laundering Authority) marking a decisive shift toward a stronger, more unified AML framework.

AMLA’s Role and Ambitions

AMLA is not just another EU agency. It is the central pillar of the Union’s reimagined AML architecture. Its mandate spans four core responsibilities:

• Regulator: AMLA takes over from the European Banking Authority (EBA) to set EU-wide AML rules.

• Supervisor: It will directly oversee high-risk institutions (including crypto-asset service providers) and act as a watchdog for the broader sector, including non-financial professions.

• Intelligence Hub: AMLA will coordinate and support Financial Intelligence Units (FIUs), becoming the EU’s centre for financial intelligence.

• Sanctions Enforcer: It will help ensure that EU financial sanctions are applied consistently and effectively.

Overcoming structural weaknesses

AMLA’s success hinges on its ability to address deep-rooted systemic challenges:

• Fragmented Supervision: Criminals have exploited inconsistencies between national systems. AMLA must close these gaps and drive true EU-wide oversight.

• Box-Ticking Culture: A rigid, legalistic approach has often replaced meaningful risk analysis. AMLA must reinstate a risk-based approach, targeting real threats rather than merely ensuring formal compliance.

• Siloed Operations: Poor coordination and limited data sharing have weakened effectiveness. AMLA must foster collaboration and break down institutional silos.

• Underused Technology: Criminal networks are growing more sophisticated, while AML systems remain outdated. AMLA must lead on innovation and smart use of data.

Supporting a practical and risk-based framework

Until AMLA becomes fully operational, the EBA continues to provide technical input. They have drafted Regulatory Technical Standards (RTS) on customer due diligence (CDD) under Article 28(1) of the AML Regulation.

While the EBA’s work is commendable, effective implementation will depend on four principles:

• 1. Proportionate CDD and UBO Rules: Excessive know-your-customer (KYC) and beneficial ownership (UBO) requirements risk harming banks’ customers experience and increasing their compliance costs without significantly improving AML outcomes.

• 2. Harmonisation Across the EU: Diverging national interpretations of EU rules hinder consistency. Standardised approaches are needed, with minimal room for unnecessary national discretion.

• 3. Risk-Based Ongoing Due Diligence: Ongoing monitoring should balance fixed review intervals and risk-triggered updates.

• 4. Targeted Enhanced Due Diligence (EDD): EDD measures should align with actual risk exposure. Simplified Due Diligence (SDD) should apply to all non-high-risk customers.

Key priorities for AMLA

As AMLA prepares to take the lead, four priorities must guide its path:

• 1. High-Quality, Risk-Based Supervision: The upcoming RTS under Article 40(2) of the AMLD and Article 12(7) of the AMLA Regulation must reflect varying levels of institutional risk without imposing undue operational burdens.

• 2. Supervisory Convergence: National discretion must be carefully limited to avoid diverging risk assessments and compliance challenges for cross-border institutions.

• 3. Engagement with Stakeholders: AMLA must maintain transparent, constructive relationships with supervised entities. A dedicated platform for regular dialogue with banks and financial institutions is essential along the lines of the SSM Boardroom dialogue facilitated by the European Banking Federation (EBF).

• 4. Stronger Public-Private Partnerships: Effective AML relies on intelligence-led collaboration. AMLA should help expand operational Public-Private Partnerships (PPPs), including joining Europol’s Financial Intelligence PPP, and clarify the legal basis for data sharing under Article 75 of the AML Regulation.

AMLA represents a pivotal step toward a unified and effective EU approach to combatting money laundering and financial crime.

But success will depend on its ability to deliver proportionate, risk-based, and collaborative supervision, supported by practical regulation, modern technology, and genuine partnership across sectors and borders

• The text is from the address delivered by Roger Kaiser at the ‘Compliance Council’ Roundtable at the European Parliament