AMLA Advances Selection of 40 Financial Institutions for Direct EU Supervision

The European Union’s Anti-Money Laundering Authority (AMLA) is progressing with preparations to identify the financial institutions that will fall under its direct supervision from 2028, with the selection process focusing on high-risk banks and other financial services businesses operating across multiple EU Member States.

The authority is expected to select up to 40 institutions for its first round of direct supervision. The process represents a major development in the EU’s anti-money laundering framework, as responsibility for supervising certain cross-border financial institutions will move from national authorities to a central EU-level body.

AMLA has already begun gathering information from national supervisory authorities to identify institutions that may meet the eligibility criteria. The exercise covers financial institutions whose activities extend across at least six EU Member States, including their home country, and whose residual money laundering and terrorist financing risk is assessed as high.

The selection is not limited to traditional banks. Depending on their activities and risk profiles, eligible entities may include payment institutions, money services businesses and other financial services providers. The assessment is intended to identify institutions whose cross-border operations and financial crime risks justify direct oversight at EU level.

The authority has emphasised that inclusion in the list should not automatically be interpreted as evidence of misconduct or regulatory deficiencies. Rather, selection reflects an institution’s systemic importance, geographical reach and risk profile. The objective is to establish more consistent supervision of businesses whose operations extend beyond the effective reach of any single national supervisory authority.

The preparatory process involves collecting financial crime-related risk information from thousands of potentially eligible institutions. National authorities are responsible for gathering and submitting relevant data using AMLA’s reporting framework. This information will support the assessment of eligibility and the subsequent comparison of institutions across the EU.

Under the selection methodology, the number of Member States in which an institution operates will also be relevant when determining which entities are selected. Where more than 40 institutions satisfy the eligibility requirements, the framework provides for the selection of those with the widest cross-border presence.

AMLA’s direct supervisory responsibilities will include assessing whether selected institutions comply with the EU’s anti-money laundering and counter-terrorist financing requirements. Its powers will include requesting information, conducting supervisory activities and inspections, requiring corrective measures and imposing administrative sanctions where necessary.

The move towards centralised supervision is intended to address differences in how financial institutions are supervised across national jurisdictions. Under the previous framework, AML supervision was primarily conducted by national competent authorities applying domestic legislation based on EU directives. This approach sometimes resulted in differences in supervisory expectations, enforcement practices and the interpretation of requirements, particularly for groups operating in several countries.

AMLA is expected to reduce these inconsistencies by establishing a more coordinated supervisory approach. Selected institutions will be subject to direct oversight by AMLA through joint supervisory teams, with participation from relevant national authorities. This arrangement is intended to provide a consolidated view of group-wide financial crime risks and the effectiveness of controls across different jurisdictions.

The authority will also play a wider role in harmonising the EU’s AML framework. The new Anti-Money Laundering Regulation (AMLR), which will generally apply from 10 July 2027, is designed to establish a more uniform set of requirements across Member States. Its implementation, together with AMLA’s supervisory responsibilities, forms part of the EU’s broader effort to strengthen the prevention of money laundering and terrorist financing.

For financial institutions with extensive cross-border operations, the forthcoming selection process creates an important regulatory consideration. Businesses that may qualify for direct supervision should assess their group-wide AML governance arrangements, risk assessment methodologies, customer due diligence procedures, transaction monitoring systems and internal reporting structures.

Particular attention should be given to the consistency of controls across subsidiaries and branches. A group operating in several Member States may face different national supervisory expectations, but direct AMLA oversight is expected to require a more consistent and comprehensive approach to identifying and managing financial crime risks at group level.

The quality of information submitted during the preparatory phase will also be important. Inaccurate or incomplete data concerning geographical presence, business activities and residual risk could affect the assessment of an institution’s eligibility and its position in the selection process. Institutions should therefore ensure that the information provided to national supervisors accurately reflects their activities and risk exposure.

The first selection exercise is expected to take place during 2027, with direct supervision of the selected institutions scheduled to begin in 2028. The process will mark a significant shift in the EU’s supervisory structure, placing a limited group of high-risk, cross-border financial institutions under direct oversight by a central authority.

The establishment of AMLA and the introduction of direct supervision represent a move towards a more integrated European approach to financial crime prevention. For institutions operating across multiple Member States, the changes will require close monitoring of regulatory developments and preparation for potentially more consistent, intensive and coordinated AML supervision.

By fLEXI tEAM