"Terrorist attacks on European soil in recent years have underscored the need to substantially boost efforts to fight terrorism and terrorist financing at EU level," a French government paper, seen by Reuters, said.
The document was sent to ministers this week and will be discussed at a meeting in Brussels on 8 December, Reuters said.
Terrorism financing is one of the subjects on the formal agenda of the meeting, Reuters said.
"E-money and, particularly, prepaid cards…could be very widely used by organised crime, migrant traffickers and terrorists," the French paper said, according to Reuters.
"Criminal investigation department officers have already found prepaid cards during searches of the homes of individuals belonging to such networks," it said.
The French government first proposed controls on prepaid cards after the Charlie Hebdo terrorist attack in January, and has reiterated its concerns since the latest attacks in November.
France is proposing a cap to the amount of currency that can be stored on these cards. The French customs recently seized a Panamanian prepaid e-money card with €250,000 stored on it, Reuters said.
France is also keen to see controls on, and limits to, the conversion of virtual currencies such as bitcoin into standard currencies, Reuters said.
Financial services technology expert Angus McFadyen of Pinsent Masons, the law firm behind Out-Law.com said that the situation is not as simple as changing the rules in Europe.
"The issuer could be a European-based and regulated entity or an international one. The EU has in place rules that define when, and what level of, anti-money laundering and counter terrorist finance (AML/CTF) checks need to be carried out when a card is issued in the EU and when EU based/regulated entities operate such cards; an onus is put on the issuers to use a risk based approach to identify and monitor possible incidents. But if the card is issued, for example, in Panama then those AML/CTF rules would not apply to the card, just as they wouldn’t apply to a bank account opened there," McFadyen said.
"That Panamanian card can be used across the EU at merchants that accept the card scheme. Given the loophole of using a non-EU based issuer, I have my doubts that tightening up rules around issuing cards that apply to EU issuers will have a major impact on intelligence and counter-terrorism efforts. It will also make it more challenging for issuers to operate, particularly those where cards are low value and issued for customer convenience," he said.
France has also proposed a European program to track bank transfers by organisations that are suspected of being involved in terrorism, Reuters said.
"Access to bank account transaction data is a more interesting approach – that could have much wider implications and would be a significant change. The growth of APIs and open data standards in banking could make it a viable approach, on a massive scale," McFadyen said.
"Privacy campaigners won’t be fans of this. It has parallels with the debates of security v privacy that are being played out in Parliament around the use of encryption, and we saw real tension around the US having access to SWIFT, a commonly used inter-bank messaging service that is used to support many payments across Europe," he said.