Proposal for a Council Decision concerning the signing, on behalf of the European Community, of Council of Europe Convention No 198 on laundering, search, seizure and confiscation of the proceeds from crime and on the financing of terrorism
Date: 2005-09-13
Institutions: European Commission
Subjects: confiscation of property, fight against crime, financing, judicial cooperation in criminal matters in the EU, money laundering, organised crime, terrorism

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.09.2005 
COM(2005) 426 final 

Proposal for a 

COUNCIL DECISION 

concerning the signing, on behalf of the European Community, of Council of Europe 
Convention No 198 on laundering, search, seizure and confiscation of the proceeds from 
crime and on the financing of terrorism 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1. 

BACKGROUND 

Council  of  Europe  Convention  No 41  on  laundering,  search,  seizure  and  confiscation  of  the 
proceeds  from  crime  was  adopted  by  the  Council  of  Europe's  Committee  of  Ministers  in 
September 1990 and was opened for signing on 8 November of that year. It entered into force 
on 1 September 1993 and all EU Member States are now party to it. The Convention seeks to 
provide  a  set  of  rules  covering  criminal  investigations  preceding  the  imposition  and 
enforcement of confiscation decisions and to establish an effective mechanism of international 
cooperation for depriving criminals of the instrumentalities and proceeds of their activities. 

However,  because  understanding  of  the  threat  posed  by  money  laundering  and  ways  of 
tackling  it  have  moved  on  significantly  since  1990,  discussions  got  under  way  in  1998  on 
possible amendments to the Convention. 

In November 2000 the Bureau of the European Committee on Crime Problems (CDPC) of the 
Council of Europe decided to set up a Reflection Group on the advisability of drawing up an 
Additional Protocol to the 1990 Convention. 

The  Reflection  Group's  Final  Activity  Report  was  submitted  to  the  CDPC  at  its  plenary 
meeting  in  June 2002.  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.  

At its 52nd meeting in June 2003, the CDPC 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 was drafted in the end rather than a mere protocol.  

Between  December 2003  and  February 2005,  the  committee  of  experts  held  seven  meetings 
and discussed  a draft new convention on  laundering,  search, seizure and confiscation of the 
proceeds  from  crime  and  on  the  financing  of  terrorism.  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  final  meeting  in 
February 2005, the committee of experts discussed parliamentary amendments and drew up a 
final  draft,  which  was  examined  by  the  CDPC  on  7  March  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. 

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2. 

RESULT OF THE NEGOTIATIONS 

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  [SEC(2004)822]  concerning  matters  of  Community 
competence  as  well  as  a  proposal  for  a  Council  common  position  on  these  negotiations  for 
matters covered by Title VI of the Treaty on European Union [COM(2004)444]. 

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  under  Article  300  of  the  Treaty  establishing  the  European  Community  and  a 
common  position  on  the  other  articles.  This  authorisation  was  accompanied  by  negotiation 
guidelines. 

The  negotiations  were  marked  by  close  cooperation  between  the  Member States,  the  Irish, 
Dutch  and  Luxembourg  Council  Presidencies  and  the  Commission.  They  took  the  form  of 
regular and fruitful coordination meetings. The deadlines laid down at the outset were all met, 
with the result that the draft convention was available for presentation at the Warsaw summit 
of the Heads of State or Government in May 2005. 

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 money-laundering 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. 

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 laundering1, as amended by Directive 2001/97/EC of the European Parliament and 
of  the  Council2  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  information3.  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. 

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3 

OJ L 166, 28.6.1991, p. 77.. 
OJ L 344, 28.12.2001, p. 76.. 
OJ L 271, 24.01.2000, p. 4.. 

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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 at last be a member of the Conference of 
the Parties provided for in Article 48, which is responsible for monitoring the implementation 
of  the  Convention.  However,  contrary  to  the  provisions  made  in  other  conventions  of  the 
Council of Europe, the Community will not have the right to decide on possible amendments 
or to accept new contracting parties to the Convention, even though it will be subject to all the 
obligations arising from the latter. By contrast, the right to take these decisions is entrusted to 
the  Member States  of  the  Council  of  Europe  (in  the  Committee  of  Ministers),  i.e.  even  to 
States that may be third parties to the Convention and therefore may not assume any of the 
obligations laid down in it. The participation of the Community, apart from helping to bring 
the  number  of  signatories  up  to  that  required  for  the  Convention  to  come  into  force,  is  of 
undoubted  importance  in  encouraging  other  parties  to  conclude  and  ratify  the  Convention, 
while at the same time the need for international cooperation in combating money laundering 
and terrorism financing has never been so pressing. 

Consequently,  the  proposal  for  a  Council  decision  presented  by  the  Commission  contains  a 
single  article.  This  article  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. 

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Proposal for a 

COUNCIL DECISION 

concerning the signing, on behalf of the European Community, of Council of Europe 
Convention No 198 on laundering, search, seizure and confiscation of the proceeds from 
crime and on the financing of terrorism 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Articles 47(2)  and  95  thereof,  read  in  conjunction  with  the  first  subparagraph  of  Article 
300(2) thereof, 

Having regard to the proposal from the Commission4, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

The  European  Community  regards  the  prevention  of  and  the  fight  against  money 
laundering  and  terrorism  financing  as  matters  of  fundamental  importance  for  the 
health, integrity and stability of credit institutions and other financial institutions, for 
confidence in the financial system as a whole and for the establishment of an area of 
freedom, security and justice. 

The members of the Council of Europe and the European Community have negotiated 
a  new  instrument  based  on  the  1990  Council  of  Europe  Convention  No 141  on 
laundering,  search,  seizure  and  confiscation  of  the  proceeds  from  crime  in  order  to 
take  into  account  developments  in  the  threats  posed  and  to  refine  international  best 
practices. 

The  Commission,  in  accordance  with  the  first  subparagraph  of  Article  300(1)  of  the 
Treaty, has conducted the negotiations on behalf of the European Community. 

The negotiations were successful and new Convention No 198 on laundering, search, 
seizure and confiscation of the proceeds from crime and on the financing of terrorism 
was opened for signing by the States and the European Community on 16 May 2005 
with the Secretary General of the Council of Europe. 

(5) 

Subject to its possible conclusion at a later date, the European Community should sign 
the said Convention, 

4 

OJ C […], […], p. […]. 

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HAS DECIDED AS FOLLOWS: 

Sole Article 

Subject  to  its  possible  conclusion  at  a  later  date,  the  President  of  the  Council  is  hereby 
authorised to designate the person empowered to sign, on behalf of the European Community, 
the  Convention  on  laundering,  search,  seizure  and  confiscation  of  the  proceeds  from  crime 
and on the financing of terrorism. 

Done at Brussels, […] 

For the Council 
The President 

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Declaration by the Commission 

ANNEX 1 

[for the minutes of the Council meeting at which it is decided to sign the Convention] 

The  Commission  notes  that  certain  general  and  institutional  clauses  of  this  Convention –  in 
particular  the  voting  of  amendments  and  the  acceptance  of  new  contracting  parties  in 
Articles 54(1)  to  (3)  and  50(1) –  do  not  allow  the  Community  to  exercise  fully  its  external 
competence  on  the  same  basis  as  the  other  parties,  even  though  the  Community  will  be 
subject to all the obligations set out in the Convention. 

The  Commission  views  this  choice  with  great  concern  given  its  role  as  guardian  of  the 
Treaties and given the case law of the Court of Justice. 

Accordingly, the  general  and  final  clauses  of the Convention can in no way be viewed as a 
precedent in relation to other conventions.  

In  addition,  the  Commission  underlines  the  need  to  apply  the  Convention  in  line  with  the 
40 recommendations  of  the  Financial  Action  Task  Force  (FATF),  last  updated  in  2003,  and 
with the relevant acquis. This applies most particularly to Recommendation 36(c) concerning 
legal assistance and extradition. A request for mutual legal assistance must not be refused on 
the sole ground that the offence is also considered to involve fiscal matters. 

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