On 14 October in Strasbourg, the European Union and eight states signed a protocol that strengthens the tools for freezing, seizing and confiscating criminal assets, crypto-assets included. The text supplements the 2005 Warsaw Convention on money laundering and the financing of terrorism. It has been signed, not ratified: it is therefore not yet in force.

According to Journal du Coin, its aim is to improve coordination between authorities facing networks whose funds move across several jurisdictions. Before assessing its scope, it is worth clarifying who adopted it, within what framework, and what it changes in practice.

A Council of Europe text, not an EU regulation

The protocol falls under the Council of Europe, an organisation separate from the European Union. It is therefore not a new regulation directly applicable across the Twenty-Seven, but an instrument of international cooperation. The EU takes part as a signatory, on the same footing as states.

Besides the European Union, the first signatories are:

  • Georgia;
  • Greece;
  • Hungary;
  • Luxembourg;
  • Monaco;
  • Montenegro;
  • San Marino;
  • the United Kingdom.

The ceremony took place during the Octopus conference on cybercrime.

Freezing, seizure, confiscation: what the protocol changes

The text strengthens several existing mechanisms rather than creating new ones. First, it provides for urgent freezes or seizures, where conditions allow, without notifying the persons concerned beforehand. The idea is to prevent assets from being moved or concealed before a possible confiscation.

Second, it extends the possibilities for confiscation to property linked to other criminal activities and, in certain situations, without a criminal conviction. Assets held by third parties may also be targeted, with safeguards provided for holders acting in good faith.

Two caveats are worth making. First, cryptocurrencies were not beyond seizure until now: what is new is the strengthening and coordination of common tools, not an entirely unprecedented power. Second, freezing and confiscation are not the same thing. A freeze temporarily prevents an asset from being disposed of; confiscation permanently deprives the owner of it, within the framework provided by law.

Faster cooperation against cross-border money laundering

The protocol strengthens the role of financial intelligence units and provides for specialised structures to trace and manage assets. It also organises direct exchanges between services, with response times that can be cut to three days for certain urgent requests.

This deadline does not, however, guarantee that funds will be blocked or recovered under the same conditions every time. Spotting transactions is not enough to regain control of the assets: the competent counterpart must be identified, the legal basis for the intervention established, and a concrete means of enforcing the measure must be available.

The source distinguishes between funds held with a service provider and cryptocurrencies held directly by an individual. In the latter case, a court decision does not automatically provide the private key needed to move the assets.

Self-custody of crypto therefore poses a practical challenge for the authorities, without placing these assets beyond the reach of seizure. This is the whole issue with tracing funds: the transparency of a blockchain is not enough; what has been identified must still be immobilised.

A text still subject to ratification

This signature should not be read as a decision that is already applicable. To enter into force, the protocol must obtain five ratifications, including three from member states of the Council of Europe.

On the European side, conclusion of the text by the Union requires, among other things, a Council decision and the consent of the European Parliament. The European Commission presents it as a complement to existing European arrangements on confiscation, the recognition of decisions and the fight against money laundering.

What about Switzerland?

Switzerland is not among the signatories listed by the source. The source does not, however, specify Switzerland's position, either on the protocol itself or on the Warsaw Convention it supplements. It would therefore be premature to draw any conclusion: only an official statement would make it possible to know whether Bern intends to sign the text or not.

For Swiss crypto players working with counterparties in the signatory countries, the matter remains one to watch, especially as the ratification procedure is only just beginning.

Effectiveness will depend on enforcement

The protocol does not solve everything. Its effectiveness will rest on the interplay between investigation, international cooperation and the authorities' actual ability to immobilise funds. The signature of 14 October opens a procedure; it is ratification, followed by the practice of the services concerned, that will show whether the recovery of criminal assets held in crypto-assets actually becomes faster.

Sources

  • Journal du Coin: « Gel et confiscation des cryptos : L’Europe renforce sa coopération contre les réseaux criminels »