Council of Europe Opens New Treaty to Strengthen Cross-Border Recovery of Criminal Assets, Including Crypto

The Council of Europe and the European Union have taken a further step towards strengthening international cooperation on money laundering and criminal asset recovery, with the signing of a new protocol designed to help authorities trace, freeze and confiscate proceeds of crime, including crypto-assets.

The Additional Protocol to the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism, commonly known as the Warsaw Convention, was opened for signature in Strasbourg on October 14, 2026. The instrument updates the existing framework to address developments in financial crime, including the increasing use of digital assets and complex cross-border structures by criminal networks.

Eight Council of Europe member states signed the protocol on the opening day: Georgia, Greece, Hungary, Luxembourg, Monaco, Montenegro, San Marino and the United Kingdom. The European Union also signed the instrument.

The protocol is intended to modernise the legal and institutional arrangements available to authorities investigating financial crime. It strengthens provisions governing asset recovery, international police and judicial cooperation, financial investigations and the prevention of money laundering.

A central objective is to make it easier for authorities to identify and trace assets connected to criminal conduct before those assets are transferred, concealed or dissipated. The framework also addresses the management of assets that have been frozen or seized, an important consideration where investigations involve complex financial holdings or assets that may lose value over time.

Crypto-assets are specifically relevant to the updated framework. Digital assets can be transferred rapidly across borders and held through arrangements that complicate the identification of beneficial owners and the tracing of criminal proceeds. The protocol updates the international cooperation framework to account for virtual assets and virtual asset service providers.

The instrument also addresses the powers of financial intelligence units (FIUs), including provisions concerning the temporary suspension of transactions in appropriate circumstances. Such powers can help authorities prevent the movement of potentially criminal funds while a transaction is examined and relevant information is assessed.

The protocol provides for stronger cooperation between FIUs and supports the development of national mechanisms that enable authorities to obtain information about financial accounts. These mechanisms may cover bank accounts, payment accounts, securities accounts, safe-deposit boxes and virtual-asset accounts.

The availability of such information can help investigators identify accounts linked to suspects, trace movements between financial institutions and establish connections between assets held in different jurisdictions. The objective is to reduce delays in financial investigations and improve the prospects of recovering assets before they are moved beyond the reach of authorities.

The protocol supplements the Warsaw Convention, which was adopted in 2005 and opened for signature in 2005. The convention provides an international framework for preventing and combating money laundering and terrorist financing, including through the identification, seizure and confiscation of criminal proceeds.

Since the convention was developed, financial crime has evolved significantly. Criminal networks increasingly use digital payment systems, crypto-assets, professional money laundering services and complex cross-border corporate structures. The new protocol is intended to adapt international cooperation arrangements to these developments.

The European Commission has described asset recovery as a key element of the EU’s wider efforts to combat organised crime and illicit financial flows. It has noted that only around 1% of criminal assets are recovered in the European Union, despite the scale of proceeds generated by organised criminal activity.

The protocol complements existing EU measures, including the 2024 Asset Recovery and Confiscation Directive and rules governing the mutual recognition of freezing and confiscation orders. However, its international reach is significant because it provides a framework for cooperation beyond the EU, including with other Council of Europe member states that become parties to the instrument.

The signing does not mean that the protocol has entered into force. The instrument must complete the applicable approval and ratification procedures before its provisions become binding on participating parties. Under its entry-into-force rules, it will take effect after five signatories, including at least three Council of Europe member states, have expressed their consent to be bound, following the specified waiting period.

At EU level, further steps are also required to conclude the protocol and the underlying Warsaw Convention. The European Parliament's consent will be necessary as part of the relevant EU procedures.

Once in force, the protocol is expected to provide authorities with additional legal tools for conducting financial investigations, coordinating asset recovery and exchanging information in cases involving several jurisdictions. Its practical impact will depend on implementation by participating countries and the ability of their competent authorities to use the new cooperation mechanisms effectively.

The agreement represents a further development in international efforts to prevent criminals from retaining the proceeds of fraud, corruption, money laundering and other serious offences. By updating the framework for cooperation and explicitly addressing virtual assets, the protocol seeks to improve the ability of authorities to trace and recover criminal property across borders.

By fLEXI tEAM