Choosing the AMLA Chair
Who will be chosen to lead Europe’s new anti-money laundering watchdog?
AMLA takes guard
This week I'm making a small detour away from the ECB to look briefly at its soon-to-be neighbour in Frankfurt, AMLA.
The EU Anti-Money Laundering Authority (AMLA) was formally established last month, after the passage of landmark legislation to overhaul the EU's anti-money laundering (AML) regime. This includes a new single EU AML rulebook (in place of national AML rules) as well as the new agency.
AMLA the allrounder
AMLA will be a multi-role agency with wide-ranging powers. First, it will be a regulator – specifying many of the details of the single rulebook in binding technical standards and guidelines. Second, it will be a supervisor, monitoring firms’ compliance.
In a structure loosely modeled on the Single Supervisory Mechanism (SSM), AMLA will sit at the centre of an EU-wide network of AML supervisors. It will directly supervise the 40 highest-risk financial firms in Europe, deploying Joint Supervisory Teams (JSTs) consisting of both AMLA and national authority staff. It will also indirectly supervise other firms, by coordinating the activities of national AML authorities and developing a common supervisory toolkit for them all to use.
As a supervisor, AMLA will thus play an analogous role to that of the ECB within the SSM, though with a smaller span of direct supervision (the ECB directly supervises over 100 banks, accounting for the overwhelming majority of Eurozone bank assets).
Picking the Team Captain
AMLA is thus set to play a central role in Europe’s fight against financial crime -and it will need effective leadership to fulfil its mission. This week (on 8 July) applications closed for the position of AMLA Chair. The first Chair will lead AMLA through its ‘start-up’ phase, representing the new agency in public and shaping its policies, priorities and practices as it establishes itself within the EU AML regime. Reflecting these weighty responsibilities, the European Commission (EC) vacancy notice stipulates that the Chair must have extensive professional experience in the AML field, excellent analytical skills and a track record of senior management. They will also need great negotiating skill to work well with the many existing national AML authorities and bind them together into a single coherent system.
Despite the technocratic framing of the vacancy notice, appointments of this type are inevitably political. In particular, the geographical distribution of positions is always significant in the EU. AMLA looks set to follow this trend.
Turning Pitch
Ever since Frankfurt was chosen (over Paris) as the location for AMLA in February, local rumour has consistently held that the first Chair will have to be French. Only on this basis, it was argued, would France agree to support Germany’s bid to host the new agency and its 400+ employees. (As for other bidding countries, Spain is said to have been ‘compensated’ by the appointment of Nadia Calvino as European Investment Bank President; while Ireland is deemed too small to demand a ‘consolation prize’.*)
This assumption could, however, be complicated by the latest French parliamentary election. Victory for the Rassemblement National (RN) would no doubt have killed a French AMLA candidacy, as the EU would not want to appear to ‘reward’ a Eurosceptic RN government. Given Sunday’s result, that prospect looks to have receded. But as parties of the left and centre jockey to form a new government, there is a risk that Paris is too preoccupied with internal politics to be in a position to push effectively for its favoured candidate. That could inject uncertainty and potentially open up a path for an alternative candidate.
Straight Bat
On the other hand, it appears AMLA has successfully avoided becoming entangled in the negotiations over other top EU positions. In 2019, by contrast, Christine Lagarde’s appointment as ECB President was key to the wider agreement to name Ursula von der Leyen as President of the EC (something that has arguably weakened Lagarde’s position throughout her tenure). This time around, the AMLA Chair position was kept separate from the difficult negotiations over von der Leyen’s re-appointment (and the choice of European Council Representative and Foreign Policy High Representative). The EC’s AMLA task force must be heaving a collective of relief.
Time Pressure
EU high politics may, though, still impact how soon an AMLA Chair can be chosen. The EC aims to have the Chair in post by the end of the year. That may seem a long time away, but could prove a challenging deadline due to the elaborate nomination process laid down by the AMLA regulation.
Under this process, the EC must first produce a shortlist of at least two candidates. The European Parliament (EP) may (and in practice almost certainly will) summon them for hearings. Next the EC will formally propose a single nominee for AMLA Chair. That person must be confirmed by the EP (likely involving another hearing, then a committee vote, then a plenary vote) and EU governments (the Council).
It is not impossible to get this done by year-end (for comparison Claudia Buch’s appointment as SSM Chair took roughly four months from the first informal EP hearings to the final Council decision). But it is a highly ambitious timetable – and could be delayed by political wrangling over the confirmation of the new EC.
Final result
So who will emerge as AMLA’s first Chair? At this stage it is still too early to tell. But all who support Europe’s fight against financial crime should hope that the process results in AMLA getting a founding leader of stature, skill and vision to see the new agency through its foundation years. They will have a daunting task ahead.
* That said, some observers did read the Central Bank of Ireland Deputy Governor’s AMLA speech in May as a pitch for either the Chair or another senior AMLA position.
A quick PS
I will be on holiday next week, so won’t be posting. Look out for my next post in the week of 22 July.