Urgent need to strengthen financial intelligence units – Sharper tools needed to improve confiscation of illegal assets
- Author(s):
- Parliamentary Assembly
- Origin
- Text
adopted by the Standing Committee, acting on behalf of
the Assembly, on 19 March 2021 (see Doc. 15192, report of the Committee on Legal Affairs and Human
Rights, rapporteur: Ms Thorhildur Sunna Ævarsdóttir).See
also Recommendation 2195
(2021).
1. Numerous scandals, including the
recent leaks from FinCEN, the United States Treasury Department’s Financial
Crimes Enforcement Network, have shown that national and international
efforts aimed at combating money laundering and terrorist financing
have fallen far short of declared objectives. According to the World Bank,
the worldwide proceeds of organised crime and high-level corruption
amount to several trillions of US dollars each year. Only a tiny
fraction is successfully confiscated by law enforcement. The remainder, accumulating
in the hands of organised criminals, corrupt public officials and
terrorists, represents a huge threat for democracy, the rule of
law and national security in all member States. At the same time,
successful confiscation of illegal assets represents a significant
opportunity for States to generate the resources needed to address
the social problems caused by organised crime, corruption and terrorism.
Urgent action to step up the tracking and confiscation of the proceeds
of crime is therefore both necessary and potentially highly rewarding.
2. The Council of Europe’s Committee of Experts on the Evaluation
of Anti-Money Laundering Measures and the Financing of Terrorism
(MONEYVAL) and the Group of States against Corruption (GRECO), together with
the Egmont Group of Financial Intelligence Units, play an important
role in the fight against money laundering and terrorism financing
by setting relevant standards, monitoring their implementation and organising
international co-operation and training activities.
3. The Parliamentary Assembly, in
Resolution 2218 (2018) on fighting
organised crime by facilitating the confiscation of illegal assets,
recommended States to reverse the burden of proof regarding the
legality of assets by requiring the persons concerned to establish
the legitimate origin of the suspect assets they hold.
4. The Council of Europe Convention on Laundering, Search, Seizure
and Confiscation of the Proceeds from Crime and on the Financing
of Terrorism (CETS No. 198, Warsaw Convention) provides an important legal
framework for financial intelligence units (FIUs) and international
co-operation in this field. Most, but not all member States of the
Council of Europe have signed and ratified it.
5. In order for illegal assets to be successfully confiscated,
they must be identified as suspicious and secured. FIUs set up by
all Council of Europe member States and many other States under
the auspices of the Financial Action Task Force (FATF) play a crucial
role. FIUs receive suspicious transaction reports (STRs) from the
private sector (banks, insurance companies, lawyers), which they
are required to analyse and act upon, including by freezing certain
transactions temporarily and passing on information to law-enforcement
bodies for the purposes of confiscation and prosecution.
6. While the FATF standards allow for different organisational
models of FIUs (administrative, law-enforcement or hybrid models),
they must be given the independence, competences and human and material resources
necessary to fulfil their role effectively.
7. Under the Warsaw Convention, FIUs have the power to postpone
suspicious transactions for some time, pending further inquiries,
both domestically (Article 14) and upon the request of a foreign
FIU (Article 47). This option is not yet included in the FATF’s
standards for FIUs.
8. The Egmont Group assists FIUs to increase their effectiveness
through training and staff exchanges and through fostering better
and more secure communication among FIUs for the purpose of mutual
exchange of information.
9. The effectiveness of FIUs can be assessed in terms of the
rate of success in transforming STRs into actionable evidence for
the purposes of confiscating illegal assets and prosecuting relevant
crimes (“conversion rate”), which depends on close co-operation
and mutual feedback between the FIUs and the reporting entities
(banks, etc.) on one side and law-enforcement authorities on the
other.
10. The main issues FIUs face, as identified in regular national
assessments conducted, in particular, by the FATF and MONEYVAL,
include the following:
10.1 the
uneven quality and large quantity of reports filed by the reporting
entities (banks, etc.), the release of assets by reporting entities
before they have had feedback from the FIU, the lack of knowledge
on money-laundering/terrorism financing typologies by reporting
entities, as well as the lack of effective feedback, guidance and
training for reporting entities;
10.2 the lack of autonomy and independence of certain FIUs,
understaffing and insufficient material resources (information technology
(IT) equipment and tools, archiving and data management and data exchange
systems); inadequate technical capacities in the context of new
challenges (growing demand for online services and internet payment
systems, financial technology (“fintech”)) and the complex nature
of criminal schemes and money-laundering channels (including cybercrime);
and inadequate use by FIUs of their suspension powers, even where
they have such powers;
10.3 law-enforcement authorities’ inability to take prompt
action to follow up intelligence provided by FIUs to ensure that
assets are frozen and/or seized while conducting an investigation;
their inability to provide timely feedback to an FIU about the quality
of the disseminated information and the actions taken.
11. The fight against money laundering and terrorism financing
is negatively impacted by so-called “golden passport” programmes,
which involve the granting of citizenship in return for the investment
of a large sum of money in the country concerned. These programmes,
offered by Cyprus and Malta in particular, have given rise to numerous
abuses that have recently prompted the European Commission to launch
infringement proceedings against these two countries.
12. A number of designated non-financial businesses and professions
(DNFBPs) continue to represent the weakest links in global anti-money
laundering efforts, in particular casinos, lawyers, notaries, accountants,
real estate agents, dealers in precious metals and stones, and trust
and company service providers. The supervision of these financial
“gatekeepers” is often assigned to FIUs, without the allocation
of adequate supervisory resources.
13. The Assembly therefore invites all member States of the Council
of Europe and those States which have observer or co-operative status
with the Organisation to:
13.1 strengthen
their FIUs in line with the recommendations by the FATF and MONEYVAL,
in particular by providing them with sufficient powers, human resources,
IT tools and training opportunities to enable them to cope with
new challenges and the increasing complexity of money-laundering channels;
13.2 respect their FIUs’ autonomy and refrain from any political
interference in their work;
13.3 grant all FIUs the power to temporarily suspend suspicious
transactions, including at the request of a foreign counterpart,
as foreseen in Articles 14 and 47 of the Warsaw Convention;
13.4 strengthen the capacity of their law-enforcement bodies
(police, prosecution and courts) to take timely action following
the transmission of financial intelligence by FIUs by creating specialised,
well-trained and sufficiently resourced task forces working in close
co-operation with the FIUs; collecting and publishing statistics
in order to evaluate the “conversion rate” of STRs into effective
investigations, confiscations and prosecutions;
13.5 strengthen international co-operation between FIUs by
making relevant legislation and institutional set-ups interoperable,
allowing for the unbureaucratic exchange of financial intelligence
and promoting informal exchanges of experience through bodies such
as the Egmont Group;
13.6 encourage their competent authorities to engage in a constructive
dialogue with the private sector (reporting entities) in order to
ensure the highest possible quality, rather than quantity, of STRs
and other reports; consider offering mandatory or optional training
to reporting entities;
13.7 allocate sufficient resources to FIUs to ensure effective
supervision of DNFBPs, focusing on those with transnational operations;
13.8 sign and ratify the Warsaw Convention, if they have not
already done so;
13.9 reverse the burden of proof regarding the legality of
assets by requiring the persons concerned to establish the legitimate
origin of the suspect assets they hold;
13.10 end any citizenship-for-investment programmes they may
still have on offer.
