When AML Meets Competition Law: Information Sharing and Compliance Considerations for Financial Institutions

Karolina Hadzhieva is an Associate Analyst II at AML RightSource. We encourage our team

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Introduction

Financial crime is becoming increasingly complex and cross-border. To detect money laundering, sanctions evasion, fraud, and other illicit activity, financial institutions rely more than ever on information sharing and cooperation.

Regulators actively encourage this approach. In the European Union (EU), the Anti-Money Laundering Directive and the newly established Anti-Money Laundering Authority support greater collaboration among institutions. Similarly, in the United States, Section 314(b) of the USA PATRIOT Act allows financial institutions to share information related to financial crime.

While information sharing plays an important role in Anti-Money Laundering (AML) compliance, organizations should also be aware of the legal considerations that may arise when exchanging information with competitors. Failure to manage these risks appropriately can lead to significant consequences, including regulatory investigations, substantial financial penalties, reputational harm, and costly litigation. In some jurisdictions, senior executives may also face personal liability or criminal sanctions. Effective governance and adherence to regulatory frameworks are therefore essential.

Why Information Sharing Matters

Financial crime rarely affects a single institution. Criminal networks often exploit gaps between banks, jurisdictions, and regulatory systems. According to the United Nations Office on Drugs and Crime, between 2% and 5% of global GDP—roughly USD 800 billion to USD 2 trillion—is laundered every year.

To address these risks, institutions exchange information through:

• Typology and red flag sharing

• Joint fraud prevention initiatives

• Public-private partnerships

• Sanctions intelligence sharing

• Centralized Know Your Customer utilities.

Such cooperation can significantly improve the detection of suspicious activity and strengthen compliance programs. Public-private initiatives such as the UK’s Joint Money Laundering Intelligence Taskforce have supported major investigations and helped identify significant suspicious transaction flows.

Regulators continue to expand opportunities for information sharing. In 2020, the U.S. Department of the Treasury and FinCEN broadened the scope of information sharing under Section 314(b) of the USA PATRIOT Act. The updated guidance from June 2026 clarified that institutions may share information not only regarding money laundering and terrorist financing, but also activities such as fraud, cybercrime, sanctions evasion, and other specified unlawful activities that may generate illicit proceeds.

Both the EU and U.S. approaches reflect a common objective: encouraging collaboration while ensuring that information sharing remains subject to appropriate controls.

Competition Law Considerations

Competition law generally prohibits agreements or practices that restrict competition. In the EU, Article 101(1) TFEU prohibits agreements that distort competition. Similar rules exist under Section 1 of the U.S. Sherman Antitrust Act and the UK Competition Act 1998.

AML cooperation is generally lawful and often encouraged by regulators. However, organizations should remain mindful that information-sharing arrangements involving competitors require clear boundaries.

Competition law concerns may arise where institutions exchange information unrelated to AML objectives, such as:

• Pricing information

• Strategic commercial plans

• Customer allocation details

• Market-sensitive operational data

• Information unrelated to financial crime prevention objectives.

The European Commission’s Horizontal Cooperation Guidelines note that information exchanges may raise concerns where they reduce strategic uncertainty in the market. Authorities typically assess factors such as the type of information exchanged, market concentration, the frequency of exchanges, and whether the exchange serves a legitimate regulatory purpose.

The key issue is not whether institutions should cooperate, but whether information-sharing arrangements are properly designed, governed, and limited to their intended purpose.

Regulatory Recognition of Information-Sharing Risks

Regulators generally recognize the value of information sharing in combating financial crime. At the same time, they increasingly acknowledge the need for appropriate safeguards.

During discussions on the EU AML/CFT Package, the European Data Protection Board raised concerns about proposals that would allow broader sharing of customer due diligence information, suspicious transaction-related information, and customer risk assessments among financial institutions. Although raised primarily from a data protection perspective, these concerns highlighted broader risks associated with large-scale information sharing, including over-sharing, de-risking, and the potential creation of de facto customer blacklists.

The final AML Regulation retained information-sharing partnerships in Article 75 but subjected them to a structured framework. Information sharing must be necessary for AML/CFT purposes, limited to specific categories of information, and supported by governance measures, supervisory oversight, and data protection safeguards.

A useful illustration of the sensitivity surrounding information exchanges can also be found in the Portuguese Banking Case. In 2019, the Portuguese Competition Authority fined 14 banks for exchanging commercially sensitive information relating to retail credit products. In 2024, the Court of Justice of the European Union confirmed that such exchanges may constitute a restriction of competition by object under Article 101 TFEU. While the case did not involve AML cooperation, it demonstrates why information-sharing arrangements between competitors require clear limitations and appropriate controls.

Managing Information-Sharing Arrangements

Several practical measures can help organizations balance AML objectives with broader legal and regulatory considerations.

• Clearly Define the Purpose

Information sharing should be limited to clearly identified AML or financial crime prevention objectives.

• Avoid Sharing Commercially Sensitive Information

Organizations should not exchange information unrelated to AML purposes, particularly pricing strategies, market positioning, or customer acquisition plans.

• Ensure Legal and Compliance Oversight

Legal and compliance teams should actively oversee information-sharing arrangements to ensure compliance with applicable regulatory requirements.

• Establish Clear Governance Rules

Information-sharing partnerships should operate under documented procedures, participation rules, and record-keeping requirements.

• Follow Regulatory Frameworks

Organizations should ensure that information-sharing activities align with established frameworks, such as Article 75 of the AMLR in the EU and Section 314(b) of the USA PATRIOT Act in the United States.

Conclusion

Information sharing has become an important tool in the fight against financial crime. Regulators increasingly encourage collaboration because financial crime often extends beyond the visibility of any single institution.

At the same time, organizations should remain aware of the legal and regulatory considerations that may arise when exchanging information with competitors. By adhering to established regulatory frameworks, maintaining appropriate governance structures, and ensuring information sharing remains proportionate and purpose-driven, financial institutions can strengthen their AML efforts while reducing broader compliance risks.

As information-sharing partnerships continue to evolve, awareness of competition law considerations should form part of a broader compliance and risk-management strategy.