Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism [Warsaw Convention]

Background information:

Money laundering is not a new phenomenon – criminals have always tried to hide their bounty – but it is taking new forms. This involves a series of complicated financial operations (deposit, withdrawals, bank transfers, etc.) which ultimately results in criminal money becoming “clean” and acceptable for legitimate business purposes.
The problem of money laundering, however, has grown dramatically in recent years, to keep pace with the magnitude of the funds involved and invested. Several billions of Euros are available for laundering every year. This laundered criminal money is recycled through normal businesses and thus may penetrate legitimate markets and corrupt entire economies.

Misuse of the financial system is not limited to money laundering schemes designed to preserve and maximise proceeds from crimes, which have been committed. The financial system is misused in similar ways to fund terrorist atrocities. Terrorist groups have always sought funds – in various ways – to support their actions. Traditionally, such activities were also illegal, eg. bank robberies, weapons and drug trafficking, etc. However, in recent years, a new phenomenon has grown: the carrying out of legitimate activities to finance terrorist actions. In this case, the phenomenon is the opposite of money laundering: the “clean” money collected through charities, legitimate commercial activities and so on, can be used to finance terrorist actions.

Preparing the Convention:

The Council of Europe was well ahead of its time in 1980 when it adopted the first international instrument against money laundering (Recommendation No. R(80)10 on measures against the transfer and the safekeeping of funds of criminal origin). In 1990, the Convention on laundering, search, seizure and confiscation of the proceeds from crime (ETS 141) was approved by the Committee of Ministers and entered into force in September 1993.

One of the major purposes of the 1990 Convention is to facilitate international cooperation in this area in a manner, which complements existing Council of Europe instruments. The Select Committee of Experts, which elaborated the text of the 1990 Convention, was of the view that this goal could only be accomplished if steps were taken to minimise the significant differences of approach which then existed in the domestic legal systems of member States. Consequently, Chapter II of the 1990 Convention addresses national measures while Chapter III focuses on international cooperation. In the years since its conclusion, the 1990 Convention has come to be regarded as a key point of reference in anti-money laundering policy discussions both in Europe and beyond. Notwithstanding the recognition, which the 1990 Convention has achieved there, have been calls over the years for a process to be put in place to review its adequacy in the light of present-day requirements. Since the adoption of the Convention, money laundering techniques and anti-money laundering strategies have significantly evolved.

Discussion within the Council of Europe started as early as 1998 on the advisability of drafting an updating Protocol to the 1990 Convention and on the scope of such an exercise should it be undertaken. Given differences of view among member States, a questionnaire-based enquiry was conducted on the subject in 2000. It emerged from this enquiry that a clear majority of States were in support of an early opening of negotiations on a protocol. The Reflection Group on the advisability of drawing up an additional protocol to the Convention on laundering, search, seizure and confiscation of the proceeds from crime submitted its report to the CDPC at its 51st plenary session on 17-21 June 2002 and made specific suggestions as to the possible content of such a treaty. It concluded that there were strong arguments in favour of comprehensively updating the Convention, which could include measures relating to the identification, seizure and confiscation of criminal assets and to international cooperation in criminal matters between law enforcement authorities.
The European Committee on crime problems (CDPC) entrusted at the end of 2003, the Committee of experts on the revision of the Warsaw Convention (PC-RM) to draw up such a protocol.

The PC-RM developed a text which both adds to and modifies provisions of the 1990 Convention. Owing to the extent of the modifications envisaged and the enlargement of the scope of the treaty to include issues concerning the financing of terrorism, the drafters felt that this text should be a (self-standing) Convention, rather than a Protocol to 1990 Convention. The PC-RM had 7 meetings between December 2003 and February 2005. The CDPC approved this Convention on 11 March 2005 and transmitted it to the Committee of Ministers for adoption. The Committee of Ministers adopted this Convention on 3 May 2005.

This Convention therefore has a larger scope as compared to the 1990 Convention, as it covers laundering and confiscation, as the 1990 Convention, but also financing of terrorism.
As to the latter, the Convention first stresses the necessity for States to take immediate steps to ratify and implement fully the 1999 UN Convention on the suppression of the financing of terrorism, thereby recognizing its fundamental value in defining an international legal framework to cut terrorists off from their funds.

On 25 June 2004, the Commission adopted a recommendation to the Council authorising the Commission to open negotiations within the framework of the deliberations of the committee of experts of the Council of Europe concerning matters of Community competence.

On 19 November 2004 the Council adopted a decision authorising the Commission to negotiate the articles of the draft convention falling within the sphere of Community competence. This authorisation was accompanied by negotiation guidelines.

The proposal for a Council decision presented by the Commission calls on the Council to authorise, on behalf of the European Community, the signing of Council of Europe Convention No 198 on laundering, search, seizure and confiscation of the proceeds from crime and on the financing of terrorism.

Council of Europe: Text of the Warsaw Convention https://www.coe.int/en/web/conventions/full-list/-/conventions/treaty/198

Council of Europe: Explanatory Report on the Warsaw Convention https://rm.coe.int/16800d3813

Wikipedia: Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism https://en.wikipedia.org/wiki/2005_Warsaw_Convention

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