The European Parliament and EU member states agreed on Wednesday to establish a central body to clamp down on money laundering as well as attempts to circumvent sanctions.
The new institution, known as the Anti-Money Laundering Authority (AMLA), will also crack down on the financing of terrorism.
It will be a hub working in coordination with national authorities to better fight against such illegal activity.
The agency will have supervisory powers and in serious cases or repeated breaches, it will have the power to hit culprits with financial penalties.
It will oversee the 40 riskiest financial entities and the agency will be able to supervise companies that allow people to trade and store crypto-assets.
“AMLA will be a game changer to crack down on dirty money in the EU,” said MEP Eva Maria Poptcheva, who helped guide the text through the parliament.
“AMLA will also play a crucial role in avoiding the circumvention of targeted financial sanctions like the ones… by the EU against Russia,” she added.
A fight has broken out among several member states, including France and Germany, over where the body’s headquarters should be.
The deal did not settle the question of the location of the agency’s headquarters, but member states and the parliament are currently discussing the issue.
Nine cities have formally submitted applications to host AMLA: Brussels, Dublin, Frankfurt, Madrid, Paris, Riga, Rome, Vienna and Vilnius.
The European Commission, the EU’s executive arm, first proposed the idea for a stand-alone agency in 2021 after a series of dirty money scandals in Europe.
The agreement must be formally adopted by the parliament and the member states.