Frankfurt has emerged as the most suitable location for anti-money laundering and counterterrorism financing (AML/CFT) authority headquarters in Europe.
This decision was reached after a voting procedure on Feb. 22. Frankfurt emerged victorious over other major cities like Paris, Madrid, and Rome. It comes as part of a broader set of reforms following a series of high-profile money laundering scandals.
In a competitive vote held on Thursday, Feb. 22, Frankfurt emerged victorious over other major contenders such as Paris, Madrid, and Rome. The outcome of this vote may serve as a precedent for future decisions regarding the siting of EU agencies.
Speaking to reporters, Mairead McGuinness of the European Commission underscored the significance of tackling the problem of dirty money seeping into the financial system. She noted the prevalence of wake-up calls in recent years concerning the laundering of illicit funds and indicated that those calls were being heeded that evening.
The choice of location represents the concluding phase of an EU AMK/CFT overhaul, which introduces limitations on substantial cash transactions and stricter identity checks for football agents and sponsors.
Past scandals
The AMLA debut comes after a series of scandals, including Danske Bank’s admission of laundering hundreds of billions in illicit Russian funds through its Tallinn branch. There was also the collapse of financial institutions such as Malta’s Pilatus and Latvia’s ABLV.
Amidst nine contenders vying to serve as AMLA headquarters, officials harbored doubts regarding the likelihood of a definitive outcome — right up to the final moments.
During the ultimate round of the confidential ballot, Frankfurt secured 28 votes, while Madrid received 16, Paris six, and Rome four, according to lead lawmaker Eva Maria Poptcheva (Spain/Renew Europe), who briefed reporters.
On Jan. 18, the Parliament and the Council reached a political agreement on the proposals for the first AML/CFT regulation and the sixth AML/CFT directive.
In December 2023, the co-legislators agreed on the AMLA Regulation. Additionally, in June 2022, they reached an agreement on a revised regulation concerning the traceability of funds and crypto-asset transfers.
These legislative texts establish a unified anti-money laundering rule book and serve as the foundation for coordinating the work between the new AMLA and national competent authorities.
Combating money laundering
Money laundering in the realm of cryptocurrency has become a focal point. Criminals are increasingly turning to digital assets to obscure illicit proceeds.
Recent data and trends underscore both the advantages and challenges cryptocurrencies pose for anti-money laundering (AML) efforts.
A 2021 report by Chainalysis highlighted the global scale of cryptocurrency laundering, amounting to $8.7 billion for the year. While this marked a decrease from previous years, it contributed to a cumulative total exceeding $33 billion since 2017.
Major tactics employed in cryptocurrency money laundering include the use of privacy coins for enhanced anonymity. It mixes services to obscure fund origins and the utilization of intermediary services like personal wallets and decentralized finance platforms.
However, Governments and regulatory bodies worldwide are ramping up efforts to combat cryptocurrency-related money laundering through strengthened AML frameworks, legislative measures, and enhanced international cooperation among law enforcement agencies.
Additionally, recent findings from Chainalysis’ 2022 report underscore the magnitude of illicit activities in the cryptocurrency space. Specifically, four exchange deposit addresses received over $1 billion in illicit funds during the year, highlighting the ongoing challenges in combating cryptocurrency-related money laundering.
On Feb. 20, a thread on X from blockchain analysts at Cyvers Alerts unveiled findings from an investigation that revealed anomaly transactions originating from wallets purportedly owned by AAX. The cryptocurrency exchange drew scrutiny after halting all withdrawals just two days following FTX’s bankruptcy.
According to the investigation, over $55.5 million worth of Ethereum (ETH) was transferred from AAX wallets in early February.
These transactions, orchestrated by an unidentified entity, were intended for laundering funds through decentralized exchange (DEX) platforms such as UmbraCash and 1inch.
