Europe wants to strip away the cloak of anonymity from virtual currency transactions to expose criminals and terrorists.
Online transactions for currencies such as Bitcoin are conducted in secret, allowing crime to flourish undetected, according to a report from the European Commission.
The study argues anonymous transactions allow funding for terrorism and money laundering to flourish.
The European Agenda for Security has devised an action plan to make moving money around harder for terrorists following recent outrages in France.
The main measures will be tracing terrorists by tracking how money and virtual currencies are switched around and identifying and blocking terrorist money sources to disrupt fund raising.
Weapons and explosives
The report explains that new financial technologies, such as Bitcoin, which are outside the banking regulatory system make raising and moving funds too easy for terrorists.
Security services want to close down these options and use any data collected from financial transactions to identify and track down terrorists.
First Vice-President of the European Commission Frans Timmermans, said: “We must cut off the resources that fund terrorism. By detecting and disrupting their money supply we reduce their ability to travel, to buy weapons and explosives, to plot attacks and to spread hate and fear online.
“The commission plans to update and develop EU rules and tools to tackle emerging threats and to step up the fight against terrorist financing.”
Virtual currencies like Bitcoin are outside the scope of international regulation and the concept of a virtual currency is based on the anonymity of users.
Smuggling and fraud
The principle has attracted terrorists and criminals, with allegations of dealing drugs and weapons on the dark web, while Bitcoin exchanges have failed losing investors millions of dollars amid claims of fraud and money laundering.
The European Commission report claims besides criminal activity, terrorists are benefitting from trading art and cultural goods as well as smuggling wildlife.
The value of transactions is also misrepresented by false invoicing and understating the value of shipments.
“We want to have a better overview of how money moves around Europe, including virtual currencies and pre-paid cards,” said Timmermans. “Although these controls are necessary, we also want this changes to cause the least possible disruption for law-abiding citizens.”
