European countries and their international partners are moving to strengthen measures against the use of digital currencies in money laundering, organized crime, and terrorist financing.
The EU, alongside eight countries, signed a new agreement last Wednesday aimed at improving cross-border efforts to search, freeze, and recover cryptocurrency connected to illicit activity. The UK, Georgia, Hungary, Greece, Luxembourg, Montenegro, Monaco, and San Marino were among the first countries to subscribe to the additional rules governing the search, confiscation, and seizure of proceeds from illicit activity and terrorist financing (Warsaw Convention).
Alain Berset, the Council of Europe Secretary General, said stronger international cooperation was essential because criminal networks can move illicit funds between jurisdictions with relative ease. He argued that depriving organized crime groups of their financial resources is an important part of protecting democratic institutions.
The new protocol brings digital assets and companies providing related services within a common framework for asset recovery. It establishes measures intended to help authorities identify, secure, and manage cryptocurrencies suspected of being connected to illegal activity.
Among the provisions is the possibility of taking urgent action to freeze or seize digital assets without notifying the holder in advance when there is a serious risk that funds could be concealed or transferred. The rules also call for participating countries to establish dedicated agencies responsible for recovering and managing assets seized during criminal investigations.
Financial Intelligence Units in national jurisdictions will receive broader powers under the agreement. Where authorities have reasonable grounds to believe a crypto transaction is associated with money laundering, these units will be able to intervene and temporarily halt the transfer.
The protocol also addresses what happens after digital assets have been confiscated. Individuals or organizations with legitimate claims to the property are to receive priority when authorities determine how recovered assets should be returned. In cases involving more than €10,000 ($11,220), proceeds recovered through joint operations are to be shared among the countries that participated in the effort.
Governments signing the agreement are also encouraged to introduce domestic laws permitting confiscated cryptocurrencies to be redirected toward public-interest initiatives, social programs, or other approved purposes.
The Council of Europe’s member states adopted the provisions in May as governments across Europe have sought stronger tools to monitor digital assets and prevent them from being exploited by criminal networks.
The latest agreement reflects a broader push to ensure that cryptocurrency markets are subject to effective safeguards while allowing authorities to respond more quickly when digital funds are tied to crime or terrorism.
Major crypto firms like Canaan Inc. (NASDAQ: CAN) will be pleased that countries are taking steps to respond when cryptos are suspected of being used for illicit purposes. These measures will help the investing public to allay any fears that their funds could, without their knowledge, be used for illegal activities.
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