World Economy

Strict Control on Virtual Currencies

Strict Control on Virtual CurrenciesStrict Control on Virtual Currencies

European leaders have agreed to step up their controls of virtual currencies such as bitcoin and other anonymous payment methods they suspect Islamic State and other terrorists use to finance attacks.

Online or electronic payment methods that could easily be used to finance terrorism or launder money will soon be subject to tighter regulations within the European Union, interior and justice ministers meeting in Brussels said, DW reported.

The call for stricter oversight of alternative banking options, such as anonymous electronic payments, money remittances or virtual currencies, was first reported by the Reuters news agency.

The ministers did not actually present any concrete measures to stem the flow of untraceable money to terrorists . They deferred that decision to the European Commission.

It wasn’t the first time surreptitious pay options have attracted security officials’ attention, nor was it the first time the EU’s executive body has decided to do something about it. The commission is already investigating six payment methods that could be used to elude authorities.

 G7’s Plans

Earlier this week, the Group of Seven industrial nations said it too would scrutinize digital currencies more closely in the wake of last week’s shooting and bombing attacks in Paris. That was according to Germany’s Der Spiegel news magazine, which reported the G7’s plans on Wednesday.

G7 meetings are usually confidential, but Der Spiegel said the group’s finance ministers had discussed the software-based financial services on offer by so-called “fintechs,” or financial technology firms, because their very nature–easy, anonymous and untraceable–made them ideal money handlers for terrorists and other criminals.

On Friday, the EU ministers also agreed to examine pre-paid cards and transfers of gold and other precious metals.

They also agreed to find ways to interrupt the illegal trade of cultural goods, such as stolen works of art–a notion that was also advocated by French President Francois Hollande earlier in the week.

Speaking to the United Nations’ cultural body after 129 people were murdered in Paris, Hollande said he would offer “asylum” to artworks that had been plundered by the Islamic State.

 IS Experimenting

Between bitcoin and gold, the IS is experimenting with currency, marking a new step in its state-crafting ambitions.

The EU Institute for Security Studies published a report in June detailing IS’ use of digital currencies and encrypted platforms, noting that such practices makes it “particularly hard to trace” the flow of finances and black market goods.

Thousands of dollars worth of bitcoin has been sent to accounts purportedly affiliated with IS, with the one of the accounts registering its first transaction in 2012.

However, following a chain of transactions from the concerned account leads to another with more than $3 million in bitcoin, though it is unclear who the account’s owner is.