The anonymity of payments using digital currencies make them attractive for terrorism financing, according to Australias financial intelligence agency, AUSTRAC, which is co-hosting a counter-terrorism financing summit with Indonesia in Bali this week.
The AUSTRAC report, Terrorism Financing in Australia 2014, said electronic, online and new payment methods posed an emerging terrorism financing risk, which was likely to increase over the short term as use of these systems grew.
It also recommends the definition of e-currency be broadened to include digital currencies such as Bitcoin that are not backed by a physical asset.
In 2014, Canada became the first country to regulate Bitcoin and other virtual currencies under its anti-money laundering and counter-terrorism financing laws.
Under the legislation, digital currencies are subject to the same record keeping, suspicious transaction reporting and verification as other money services businesses.
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