AMLA Is the Test, ESMA Is Next: How the EU's Two Supervisory Reforms Actually Differ

Centralised European financial supervision already exists. The ECB has directly supervised the largest euro-area banking groups under the Single Supervisory Mechanism since 2014, alongside national supervisors, with an established enforcement framework. What is changing now is how far that centralised model extends, and two reforms are pushing it outward in different parts of the financial system at once.

They are often discussed together, and they do run in parallel, but they operate differently and sit at different stages. AMLA is settled law now being implemented. The Market Integration and Supervision Package is a Commission proposal still under negotiation. Reading them as one project misstates what each does and whom it would affect.

1. AMLA: settled law, being implemented, not yet operating

The Authority for Anti-Money Laundering and Countering the Financing of Terrorism was legally established in 2024 and is based in Frankfurt. On 1 January 2026 the AML and CFT mandates and functions of the European Banking Authority transferred to it.

AMLA will directly supervise a limited number of the highest-risk credit and financial institutions or groups that operate in at least six Member States, chosen through a harmonised residual-risk methodology, with an initial cohort of up to 40. Most other financial-sector entities remain under national supervision within AMLA's integrated system, and AMLA can also take entities into direct supervision in specified exceptional circumstances outside the ordinary periodic selection.

The timing follows a defined legal sequence. National supervisors are collecting and submitting data through 2026, with a provisional list of eligible entities expected around the end of September 2026. AMLA must begin its first formal selection by 1 July 2027 and conclude it within six months, then publish the list and begin direct supervision six months after publication. AMLA describes direct supervision as starting during 2028.

So AMLA holds its legal powers and is building the supervisory framework, but it has not yet supervised anyone. What is genuinely new here is not EU-level supervision, which the ECB has run for banks since 2014, but the arrival of an EU-level authority for AML and CFT. Once the first selected entities move under AMLA in 2028, it will offer another working example of an EU body supervising cross-border financial groups alongside national authorities.

2. The MISP: a proposed expansion of ESMA's existing role

The Market Integration and Supervision Package, published by the European Commission on 4 December 2025, is a legislative proposal. ESMA is sometimes described as becoming "a supervisor" through it, which misses the starting point: ESMA already supervises credit rating agencies and certain third-country central counterparties. The MISP would expand that role and redraw the line between ESMA and national authorities.

Under the Commission proposal, direct ESMA supervision would cover significant trading venues, significant central counterparties and central securities depositories, and all crypto-asset service providers, together with a new voluntary Pan-European Market Operator regime for qualifying multi-state trading-venue operators. Asset management is treated differently. ESMA would carry out reviews and strengthen coordination around the largest cross-border groups of AIFMs and UCITS management companies; the proposed framework is not intended to transfer authorisation or supervision of the funds those firms manage to ESMA.

The Commission proposal is not the likely final text. At the 5 May 2026 ECOFIN, a broad majority of Member States favoured bringing only significant crypto-asset service providers under ESMA rather than all of them, and Council documents now treat "significance" as the key concept for defining ESMA's direct remit. Where this note describes scope, it distinguishes the Commission proposal from the emerging Council position, which are not the same.

3. AMLA as a reference point for the ESMA debate

The two reforms are not formally linked, and no legislative text presents the MISP as a sequel to AMLA. ESMA's Board of Supervisors has referred to lessons from AMLA and the Single Supervisory Mechanism when discussing the governance and funding implications of the MISP, which reflects shared institutional experience rather than a plan to copy AMLA's selection model.

AMLA's relevance to the ESMA question is practical. It brings direct EU-level supervision into a field, AML and CFT, that has until now been run nationally, and once it is operating in 2028 its performance will inform how confidently policymakers extend centralised supervision elsewhere. A&O Shearman has suggested AMLA's framework may come to be seen as a blueprint for the ESMA restructuring under the MISP. That is one law firm's expectation, not an official EU position, and the two reforms select and supervise their firms by different criteria.

4. The AFM and AMF position: support for the reform, questions on the build

National regulators are engaging closely with the detail. The Dutch AFM and the French AMF have published a joint position on the ESMA reforms under the MISP. They strongly support the transformation and welcome the Commission's proposal as a significant step forward, and they organise their contribution as five enablers for making centralisation work.

Supervision, they argue, should concentrate on the biggest risks to orderly markets, investor protection and financial stability rather than being drawn into a formalistic compliance approach that consumes resources without improving outcomes. Funding should be at least cost-neutral in the steady state, proportionate and capped, with full and timely reimbursement of national authorities for the tasks they keep. Governance should build in independence, and they cite the ECB's eight-year non-renewable Executive Board terms as a comparator, along with merit-based appointments and periodic independent review. On data, they want a shared architecture at ESMA with continuous real-time access for national authorities and harmonised formats and dictionaries.

Their enforcement section is the most detailed. They credit what the proposal already gets right, naming the single horizontal enforcement toolbox, the detailed infringement lists, and the reformed Executive Board governance, and then ask for clearer legal foundations at Level 1: a clear allocation of enforcement roles across ESMA, national authorities and other relevant bodies; a mandate for the Level 2 detail needed for consistent cross-border outcomes; cooperation arrangements that embed national legal expertise in ESMA's procedures; and a transitional clause to keep enforcement continuous as responsibilities transfer. Enforcement, in their view, deserves the same attention in the negotiations as supervisory powers and governance.

They also separate two questions that are easy to merge. A measure taken by ESMA has to be valid under European law and ECJ jurisprudence; executing that measure, collecting a fine being their example, has to be compatible with national administrative law and jurisprudence. A decision can be sound at EU level and still raise distinct questions when it is enforced in a Member State.

The stakes are clearest for firms holding several licences. Where an entity is supervised by ESMA while remaining subject to national market abuse rules, or holds multiple licences that place it under both ESMA and national supervision, roles can overlap or leave gaps. The AFM and AMF want explicit coordination, a designated lead supervisor, and clearly allocated responsibilities so oversight is neither duplicated nor absent, with ESMA as the decision-maker within those arrangements. They do not prescribe inspection procedures or reporting channels; their concern is that the allocation itself be set out clearly.

5. How to read the paper, and where the process stands

This is a position paper from two national supervisors who want centralisation delivered on workable terms. It is specific where that serves its case, citing Article 8a of the proposed ESMA Regulation amendments on national-authority reimbursement and the amended Article 63 on periodic review. It offers no cost estimates and no detailed end-state allocation of every ESMA and national task, though it does propose ESMA as decision-maker, a designated lead supervisor, and explicit allocation of roles.

As of early August 2026, Parliament remains at committee stage; its ECON rapporteurs presented their draft reports on 2 July. At the 10 July ECOFIN meeting, ministers committed to work towards a robust Council negotiating position by October, and the Irish presidency expressed the political ambition of reaching agreement on the package during 2026. Interinstitutional negotiations between Parliament and the Council have not yet begun.

Scope remains contested. Asset management is one prominent area of disagreement: the Commission proposal gives ESMA enhanced review and coordination over large AIFM and UCITS management groups, while some parliamentary rapporteur proposals would go further, drawing opposition from industry bodies including EFAMA. Several Member States have raised subsidiarity, proportionality and cost concerns about the breadth of direct ESMA supervision, and the debate over significant versus all crypto-asset service providers is part of the same argument. What the final legislation settles on is not yet agreed.

Following how supervision is allocated. Under AMLA, the new supervisory allocation is now being implemented. Under the MISP, the division of responsibilities between ESMA and national authorities is still being negotiated. For firms that may fall within scope, understanding that allocation early is part of staying prepared.

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This article summarises a public position paper by the AFM and the AMF, together with publicly reported developments concerning AMLA and the MISP. It is practitioner commentary and does not constitute legal advice. Readers should consult the original sources and the relevant EU legislative texts directly.