The European Commission on Tuesday unveiled new plans to set up an agency specifically aimed at tackling the region’s spiraling problems with money laundering.

The proposed Anti-Money Laundering Authority (AMLA) would be the European Union’s central body in charge of coordinating national authorities to ensure the private sector “correctly and consistently” applies EU rules on AML and countering the financing of terrorism (CFT).

AMLA would also support EU countries’ financial intelligence units (FIUs)—the national bodies in charge of monitoring and compiling data on suspicious transactions—to improve their analytical capacity around illicit flows and make financial intelligence a key source for law enforcement agencies.

A notable part of the agency’s focus would be on sharing data and enhancing cooperation among FIUs to better detect illicit cross-border flows of dirty money—an issue that is commonly identified as a current major drawback as some EU governments do not push for better enforcement or intelligence sharing.

On June 28, the European Court of Auditors, the EU’s external auditor, published a special report on the weak enforcement of AML rules in the region. It found EU bodies have limited tools to ensure the application of AML/CFT legislation and that the current oversight framework is fragmented and poorly coordinated.

The Commission hopes AMLA will establish a single integrated system of monitoring across the European Union “based on common supervisory methods and convergence of high supervisory standards” while directly overseeing some of the EU’s riskiest financial institutions, as well as those that require immediate action to address imminent risks.

If approved, the agency will strip the EU’s European Banking Authority (EBA) of the role it has had since 2019 of coordinating enforcement of AML rules.

AMLA would have the power to issue fines up to €10 million (U.S. $11.8 million) or 10 percent of a firm’s annual turnover, as well as the capability to draft regulatory guidance and technical standards.

‘Enough is enough’

The proposal to set up an EU-wide agency is part of a package of measures to tackle financial crime and improve coordination and cooperation between EU governments in clamping down on suspicious transfers.

Other proposed pieces of legislation relate to making cryptoassets more transparent and traceable, establishing a “single rulebook” for tackling AML/CFT, and replacing the current AML framework with the sixth AML directive featuring new rules for EU national supervisors and FIUs.

Announcing the proposals, Mairead McGuinness, the EU commissioner for financial stability, financial services, and the Capital Markets Union, said, “Tackling money laundering is tackling crime at its very heart. In essence, we have looked at where the gaps are in our regulatory framework, and we have said enough is enough.”

The aim is to have AMLA running by 2024—subject to approval by EU member states and the European Parliament.

It is envisaged the new agency will have around 250 staff members by 2026, of which about 100 will carry out direct supervisory work of high-risk entities. Three-quarters of its funding will come from financial contributions paid by a range of financial services firms that are identified as “high-risk” (known as “obliged entities”), while the remaining 25 percent of its planned €45.6 million (U.S. $53.8 million) budget will be funded by the European Union.

What constitutes an “obliged entity” has yet to be determined.

Anti-corruption body Transparency International said making AMLA a “centerpiece” of the bloc’s supervisory framework “could be a game-changer in fighting cross-border financial crime.”

Sarah Wrigley, director of consultancy Forensic Risk Alliance, welcomes the planned creation of the new regulator, as she believes the implementation of the EU’s succession of AML directives has not been consistent across the bloc.

“A single supervisory authority could help in establishing an effective anti-money laundering regime by eliminating country-level inconsistencies that may be exploited by criminal actors,” says Wrigley.

“Criminals operate without borders, and one of the biggest challenges for those fighting financial crime is the legal restrictions on information sharing, in particular across borders. The proposed mandate for AMLA to enhance cooperation between FIUs would be a great step forward,” she adds.

Sven Giegold, financial and economic policy spokesperson of the Greens/European Free Alliance Group in the European Parliament, warns, “Good laws are only effective when they’re implemented properly. We need a zero-tolerance policy by the Commission towards member states that do not implement existing anti-money laundering rules.”