In an outcome that’s sparked both surprise and skepticism, Frankfurt has emerged victorious in the fierce competition to host the European Union’s new anti-money laundering authority (AMLA) despite Germany’s controversial track record with financial scandals. This decision, announced on Feb 22, 2024, has left many insiders and critics questioning the EU’s judgment, dubbing it a poorly scripted joke at the expense of combating dirty money effectively.
Frankfurt’s triumph over other European capitals like Brussels, Dublin, Madrid, Paris, and Vienna in securing AMLA’s headquarters adds another feather to Germany’s financial cap but also raises eyebrows. Why? Particularly under the watchful eye of its financial regulator, BaFin, Germany has been infamously lax in its battle against money laundering. The Wirecard scandal of 2020 is a case in point, where the German authorities turned a blind eye to the fintech giant’s fraudulent activities, choosing instead to go after the journalists who exposed the scandal.
Read our Wirecard reports here on FinCrime Observer.
The selection of Frankfurt as AMLA’s base is seen as an ironic twist, especially considering Deutsche Bank‘s notorious history of money laundering scandals, including a recent $186 million fine in the U.S. for related offenses. The bank’s repeated involvement in laundering protected funds from Russia further compounds the irony, making the EU’s choice seem like a mockery of the serious issue at hand.
With the establishment of AMLA in Frankfurt, hundreds of EU officials will descend upon the city, likely attracting foreign investment from companies eager to influence the agency’s decisions. Yet, this strategic win, achieved through a complex voting system likened to Eurovision, has left a bitter taste for some, especially MEPs who favored other cities.
The creation of AMLA was propelled by a series of scandalous revelations that highlighted significant lapses in bank supervision across the EU. Its mandate is to enhance the bloc’s fight against money laundering and terrorist financing, supervising cross-border financial institutions deemed high-risk, including crypto-asset service providers.
Frankfurt’s attractiveness as a location, already home to the European Central Bank (ECB) and the EU insurance supervisory authority EIOPA, played a pivotal role in its selection. Finance Minister Christian Lindner’s personal advocacy for Frankfurt underscored the vision of centralized anti-money laundering supervision.
AMLA is poised to oversee approximately 200 European entities, primarily banks and financial service providers, and will offer recommendations to national authorities. However, Germany’s own struggle with widespread money laundering, despite recognized progress, was seen as a potential drawback in its bid.
The decision to place AMLA in Frankfurt, amidst Germany’s complicated history with financial regulation and enforcement, has led to critical reflections on the EU’s approach to safeguarding financial integrity. As the EU embarks on this new chapter in the fight against dirty money, the juxtaposition of Frankfurt’s financial prestige against Germany’s regulatory missteps prompts a reevaluation of the bloc’s strategy to ensure that history doesn’t repeat itself.
