By PAUL O’DONOGHUE, Senior Correspondent
The European Banking Authority (EBA) has issued a compelling call for anti-money laundering (AML) watchdogs and financial institutions across Europe to embrace and leverage new technologies to counter evolving money laundering and terrorist financing risks. In its latest biennial report and opinion released in mid-2025, the EBA outlines how emerging technologies such as artificial intelligence (AI), regulatory technology (RegTech), and crypto-asset monitoring tools can enable a more risk-based, data-driven, and scalable supervisory framework across the European Union’s financial sector.
The Evolving AML Landscape and Technological Imperative
The EBA’s 2025 opinion comes amid a dynamic and increasingly complex AML/CTF risk landscape, characterized by rapid innovation in fintech, cryptocurrencies, and AI-driven financial crimes. According to data collected between 2022 and 2024, 70% of competent authorities in the EU report high or rising AML/TF risks within the fintech sector. Key vulnerabilities include weak governance, inadequate customer due diligence, poor transaction monitoring, and excessive reliance on outsourcing without sufficient oversight. The EBA warns that some fintech firms appear to prioritize growth over compliance, exposing the financial ecosystem to significant risks.
Crypto-assets remain a pronounced high-risk sector with a 2.5-fold increase in authorized crypto-asset service providers (CASPs) since 2022. However, many of these providers lack effective AML systems, and some attempt to bypass regulatory scrutiny altogether. This intensifies the need for robust technological controls and supervisory measures tailored specifically to the unique challenges presented by crypto transactions.
At the same time, criminals are increasingly adopting AI technologies to automate laundering schemes, forge documents, and evade detection, forcing financial institutions to keep pace with sophisticated threats. The EBA highlights the urgent necessity for the responsible use of AI and the deployment of robust monitoring to counteract these new tactics.
Technological Solutions: Opportunities and Challenges
The EBA recognizes that new technologies can serve as a pivotal tool in the fight against financial crime by enhancing the effectiveness and efficiency of AML supervision. RegTech, for example, promises to modernize compliance by automating many regulatory processes, enabling firms to meet regulatory requirements with greater accuracy and lower costs. However, the EBA also raises cautions about the risks of careless or improper use of innovative compliance tools. Over half of serious compliance failures reported to the EBA’s EuReCA database involved misuse of RegTech solutions, often linked to lack of expert oversight and governance deficits in implementation.
The report stresses that technological advancements must be matched with adequate testing, transparency, and regulatory oversight to be truly effective. Embracing technology without proper controls could inadvertently create new vulnerabilities that criminals may exploit.
Collaborative and Risk-Based Supervisory Models
Beyond technology adoption, the EBA underscores the importance of a collaborative approach among supervisory authorities, financial firms, and law enforcement agencies. Cross-sector cooperation and information sharing are essential to enhancing AML capabilities and staying ahead of criminal innovation.
The Authority is keen on promoting a supervisory model that is increasingly risk-based, data-driven, and capable of scaling in line with the fast-paced evolution of financial markets. This means adapting risk assessment methodologies, investing in data analytics, and recruiting AML specialists with the technical skills to navigate this complex terrain.
Regulatory Developments and Future Outlook
The EBA’s observations come in tandem with the EU’s introduction of a comprehensive AML/CFT regulatory package, including the establishment of the EU Anti-Money Laundering Authority (AMLA). This new entity is tasked with harmonizing AML standards across member states, enhancing supervisory cooperation, and providing consistent enforcement.
Several regulatory technical standards (RTS) issued by the EBA are set to reshape AML compliance by focusing on risk assessment, direct supervision, customer due diligence (CDD), and enforcement measures. Financial institutions will be required to comply progressively, with key milestones approaching by 2027, especially concerning enhanced due diligence on high-risk customers.
Furthermore, the EBA’s new guidelines extend to crypto-asset service providers, mandating specific AML and counter-terrorism financing measures for the sector. These measures reflect global standards set by the Financial Action Task Force (FATF) and represent a significant step toward strengthening anti-financial crime defenses.
Embracing Responsible AI Principles
The EBA also echoes broader financial industry calls for the ethical and responsible use of AI. Principles such as fairness, accountability, transparency, and security are crucial to ensuring that AI implementations in AML do not create unintended risks or bias. Collaborative working groups involving regulators like the Bank of England and the Financial Conduct Authority (FCA) are being advocated to develop and oversee responsible AI frameworks across financial services.
The Road Ahead: Challenges and Priorities
The EBA articulates the urgency of translating regulatory objectives into operational resilience for AML frameworks across Europe. Criminals are leveraging technology at an unprecedented scale and speed, creating an ongoing challenge for supervisors and institutions alike.
Key priorities for the coming years include:
- Closing gaps in sanctions screening and transaction monitoring, especially for new payment methods and crypto instruments.
- Reinforcing governance, staff training, and specialist recruitment within AML compliance teams.
- Extending AML obligations to emerging actors, including digital gatekeepers and fintech entities not traditionally covered.
- Strengthening multi-agency cooperation to integrate AML, anti-corruption, and prudential regulation efforts.
- Ensuring financial institutions deploy new technologies with proper oversight, adequate expertise, and transparency.
Conclusion
The EBA’s 2025 opinion is a clarion call to AML watchdogs and financial institutions across the EU to embrace new technologies as the future of effective AML supervision. However, technology adoption alone is insufficient without proper governance, risk-based approaches, and collaborative frameworks. The report highlights that vigilance, continual innovation, and regulatory alignment will be key to safeguarding the EU’s financial system against evolving money laundering and terrorist financing threats in an era of rapid technological change.
As the AML regime evolves under new EU regulations and the watchful eye of AMLA, the convergence of technology, regulation, and human expertise will define the effectiveness of Europe’s fight against financial crime in the years ahead.
AML Editor’s article was originally published in amlintelligence on August 12, 2025