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The European Parliament and the Council of the European Union have agreed to the creation of a new EU agency tasked with combatting money laundering and terrorist financing.

The new body, known as the AMLA (Anti-Money Laundering Authority), will be responsible for supervising and coordinating national authorities to better detect and combat suspicious cross-border transactions.

Endowed with supervisory and sanctioning powers to ensure compliance with European financial rules, it will directly oversee around forty credit and financial institutions deemed to be most at risk, including providers of crypto-asset services. 

“AMLA will be a game changer to crack down on dirty money in the EU,” said Spanish MEP Eva Poptcheva, who is a co-rapporteur of the political agreement approving the watchdog that was reached on Wednesday.

A better crackdown on illegal transactions should help make it more difficult to finance terrorist attacks in Europe.

The new European agency “will also play a crucial role in avoiding the circumvention of targeted financial sanctions like the ones included in the 11 sanctions packages approved by the EU against Russia”, said Poptcheva.

Suspicious financial activities account for around 1% of the EU’s gross domestic product, or some €130 billion, according to Europol.

The creation of the new authority was proposed by the European Commission in July 2021.

The political agreement reached on Wednesday on this project still has to be formally approved by the MEPs in plenary session and by the Council of the European Union, which brings together the 27 Member States.

The European Parliament and the Council will also have to decide which city will host the future AMLA and its 250 or so employees. They are currently discussing the rules of the selection process.

Nine cities have submitted their applications to the European Commission: Paris, Brussels, Frankfurt, Dublin, Madrid, Rome, Riga, Vilnius and Vienna.

“The co-legislators intend to host hearings with the candidates that have expressed their interest,” said the European Parliament in a press release.