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Convention on crime proceeds, terrorist financing

The Council of Europe new Convention on laundering, search, seizure and confiscation of the proceeds from crime and on the financing of terrorism (#198)

The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (“the Convention”) approved in September 1990 (#141) has achieved recognition as one of the main international instruments in this area.

Due to significant developments which have emerged since 1990 in terms of understanding and addressing the money laundering threat, discussions began in 1998 in the Council of Europe about possible modifications to the Convention that would lead to a draft additional protocol.

In June 2003, Council of Europe instructed a committee of experts to update and expand the 1990 Convention. This mandate was subsequently extended to include drafting measures to prevent financing of terrorism in accordance with the relevant international standards, as well as preventive measures. Owing to the magnitude of the amendments, a new convention #198 (“the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism”) was drafted rather than a mere protocol.

The Commission has submitted to the Council recommendations to be authorised to negotiate on behalf of the Community those provisions of the draft Additional Protocol which fall under Community competence. Common Position was approved the 13 October 2004 and Authorisation for the Commission to negotiate the Additional Protocol was approved the 27 October 2004.

Between December 2003 and February 2005, the committee of experts held seven meetings and discussed the content of such a new convention. The agreement reached at the December 2004 meeting was submitted to the Parliamentary Assembly of the Council of Europe on 27 January 2005 for consultation (Opinion No 254/2005). At its 925th meeting on 3 May 2005, the Committee of Ministers formally adopted the Convention, paving the way for the formal endorsement of the text at the third summit of the Heads of State or Government held under the aegis of the Council of Europe in Warsaw on 16 and 17 May 2005. At that summit, eleven Member States of the Council of Europe, including eight members of the European Union (Austria, Belgium, Cyprus, Luxembourg, Malta, Poland, Portugal and Sweden) signed the Convention.

The Convention was opened for signing on 16 May 2005. It will come into force on the first day of the month following expiry of a three-month period starting on the date on which six signatories, including at least four Member States of the Council of Europe, have agreed to be bound by the Convention.

Now that the negotiations have been concluded, the Commission considers that the Council’s objectives have been met. The new Convention takes into account the other international instruments in this area, in particular the recommendations of the Financial Action Task Force (FATF). This approach has made it possible among other things to extend the Convention specifically to cover the financing of terrorism, in particular in the light of the definition of financing of terrorism contained in the UN Convention of 9 December 1999.

The new Convention is a very significant step against terrorism, by attacking its financing on a broad front and ensuring that logistical cells cannot find financial safe havens anywhere in Europe.

In addition, the overall consistency of the arrangements with current legislation in the European Union has been ensured. This applies particularly to the provisions on the preventive measures provided for in Article 13 and the provisions on the creation of financial intelligence units (Articles 1(f) and 12) and their operating procedures (provided for in Articles 14, 46 and 47). As worded, these provisions comply fully with Council Directive 91/308/EEC of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering[1] , as amended by Directive 2001/97/EC of the European Parliament and of the Council[2] and Council Decision 2000/642/JHA of 17 October 2000 concerning arrangements for cooperation between financial intelligence units of the Member States in respect of exchanging information[3] . The Convention also takes into account the proposals recently submitted by the Commission, in particular the draft third directive on the prevention of the use of the financial system for the purpose of money laundering (COM(2004)448) and the proposal for a Parliament and Council Regulation on the prevention of money laundering by means of customs cooperation (COM(2002)328).

International cooperation in criminal law matters has been reinforced, including by way of provisions allowing information on holders of bank accounts and their transactions to be divulged. The possibility of extending these provisions to non bank financial institutions has also been provided for.

A disconnection clause has been inserted in Article 52(4) of the Convention, allowing parties that are members of the European Union to apply corresponding Community and European Union rules rather than the rules contained in the Convention. This provision safeguards the necessarily evolving nature of Community and Union legislation and prevents any incompatibilities from arising in the future.

Lastly, the European Community is allowed to sign the Convention; it will be informed of any signatures, ratifications, declarations and reservations by the other parties and of any other documents associated with the Convention. It will be a member of the Conference of the Parties provided for in Article 48, which is responsible for monitoring the implementation of the Convention.

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