Drawn up by the 47-member Council of Europe, the new protocol amends existing provisions to outlaw a number of terrorism-related acts.
These include "travelling abroad for the purpose of terrorism", "receiving training for terrorism" and "organising or otherwise facilitating travelling abroad for the purpose of terrorism" -- which explicitly includes providing funding to jihadist groups.
"Rarely has such a treaty received such unanimous support from the beginning," Council of Europe chief Thorbjorn Jagland said at a signing ceremony in Latvian capital Riga.
The protocol had been put together in a record seven weeks because of the serious threat posed by foreign fighters joining the ranks of jihadists in Syria and Iraq, Jagland told assembled officials.
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The agreement must now be ratified by individual national parliaments.
The move comes as UN experts said this week that the Islamic State group is paying supporters up to $10,000 (8,800 euros) for each person that they recruit to fight in war-ravaged Syria and Iraq.