EC wants to crack down on virtual currency exchanges

The European Commission (EC) has announced its desire to crack down on the anonymous crypto-currencies. In a recent “action plan for strengthening the fight against terrorist financing”, the EC state its desire to staunch the flow of illicit funds into the hands of terrorists.

This follows on from the European Agenda on Security which highlighted the need to attack terrorist financing. The Action Plan among other things wants to pursue the disruption of “sources of revenue of terrorist organisations, by targeting their capacity to raise funds in the first place”.

Whereas once an international drug trafficker, terrorist or tax dodger might have to run his money through a series of businesses or pack cash into his jacket before smuggling it across the border, virtual currency exchanges like Bitcoin allow the anonymous transfer of large amounts of cash.

The plan notes, “There is a risk that virtual currency transfers may be used by terrorist organisations to conceal transfers, as transactions with virtual currencies are recorded, but there is no reporting mechanism equivalent to that found in the mainstream banking system to identify suspicious activity.”

Virtual currencies are not regulated at EU level and so the EC announces in the report its intention to bring the kind of anonymous exchanges found with virtual currency under the purview of the EU's Anti-Money Laundering Directive. The report also recommends the Payment Services Directive oversee such exchanges too, to “promote a better control and understanding of the market”.

The EC intends to issue a legislative proposal on virtual currency exchange platforms by the second quarter of this year.

Bitcoin, currently trading at £257, is the currency of choice for the professional hackers; it's not traceable and is easily obtainable for all those who want it. Invariably ransom groups like DD4BC and ransomware users like the gang behind CryptoWall ask for their ill-gotten gains in Bitcoin. 

So perhaps it's no wonder that the EC want to keep a close eye on this increasingly popular crypto-currency.

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