- The anti-money laundering authority will unify oversight of finance, including cryptocurrencies, across the bloc.
- The supervisory authority will directly supervise a maximum of 40 financial institutions.
- The level of scrutiny on cryptocurrencies will depend on the agency's leadership.
Europe's cryptocurrency industry has a new supervisor.
The city of Frankfurt, Germany's financial center and headquarters of the European Central Bank, will host a new agency to oversee compliance with anti-money laundering rules, lawmakers and ministers agreed Thursday evening.
The European Union is setting up a new anti-money laundering authority, or AMLA, to crack down on illicit finance across the 27-nation bloc.
The supervisory body plans to supervise credit and financial institutions operating in more than six countries in the European Union. After refining its standards in 2025, the anti-money laundering law may cover cross-border activities and products offered and risks associated with customers.
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This means that some large crypto asset providers may be subject to direct supervision.
Compliance with EU rules
These companies or institutions will need to monitor and ensure that their AML/CFT practices comply with EU rules.
Small cryptocurrency companies will be supervised by local financial intelligence units.
From 2026, the Anti-Money Laundering Authority will supervise a group of 40 financial institutions with the highest risk levels. These companies will help finance 75% of the oversight body's operations.
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But first, the anti-money laundering law will need to be approved in a final vote by the European Parliament and approved by the Council of the European Union.
Attract business
As the heart of Germany's financial sector, Frankfurt has long been preoccupied with traditional banking and business. Berlin to the east has fueled a dynamic scene for tech startups.
“Although we don’t see an actual base of cryptocurrency companies in Frankfurt, it will be interesting to see if the announcement of this location attracts some companies to the country,” said Isabella Chase, senior policy advisor at blockchain intelligence firm TRM Labs. DL News.
Nine cities competed to host the new dirty money supervisor who will enforce anti-money laundering rules in Europe, including Paris, Dublin and Riga.
These European capitals hoped that hosting the regulatory body would attract investments from financial institutions and enhance their position.
Chase said how strict the AMLA will be on cryptocurrencies will depend on his leadership. If AMLA heads are innovative and evaluate cryptocurrencies based on a data-driven risk factor, “that will define success,” she said.
Chase is optimistic that the new regulatory body could be an “opportunity for dialogue” for the cryptocurrency industry.
Frankfurt financial battle
For Chase, choosing Frankfurt makes sense. Germany has recently strengthened its efforts to combat financial crimes through legislation.
Last year, Germany's Financial Intelligence Unit appointed a new head to lead the new fight against financial crime.
From 2020 to 2022, Germany chaired the Financial Action Task Force, an international body that shapes global policies on money laundering and terrorist financing.
“The combination of a strong financial institution base, its own period of reform, and recent success running a fairly similar institution means Frankfurt makes a lot of sense,” Chase said.
Do you have advice about cryptocurrencies in Europe? Contact the author at inbar@dlnews.com.
