In an action plan to fight funding for terrorism the Commission outlined a number of measures it wants to put in place, including better tracking of cash and asset freezes.
The Commission has proposed changes to the fourth EU money laundering package, adopted in May 2015, it said. These include compulsory checks on money transferred from high risk countries, and greater power for financial intelligence units which should have access to central national bank and payment account registers.
The anonymity of virtual currencies must end, the Commission said, with exchanges brought under the scope of the anti-money laundering directive and required to check identities.
The Commission also plans to lower the threshold at which identification is needed to buy pre-paid cards.
While reducing terrorism funding is important, any measures will also affect citizens and companies throughout the EU, and proposals must "balance the need to increase security with the need to protect fundamental rights, including data protection, and economic freedoms", the Commission said.
Banking expert Michael Ruck of Pinsent Masons, the law firm behind Out-Law.com said that changes to rules governing virtual currencies would have an impact on companies.
"Bringing virtual currency exchange platforms under the scope of the anti-money laundering directive will have a significant impact upon the speed and attractiveness to many of the use of virtual currencies," he said. "While it has long been stated by prosecuting authorities that such currencies are a haven for money laundering and related criminal activity, these currencies are used by a large number of companies and individuals who may otherwise have no access to the traditional banking system."
"The approach to this issue may well define whether such virtual currencies prove to be both commercially viable and accessible to those who use them as their only source for lawful financial transactions," he said.
He also said that the plans will have implications for UK anti-money laundering rules.
"Any changes to the definition of money laundering offences may have a significant impact on the UK’s own anti money laundering systems and controls. One can only wait and see if a failure to prevent money laundering offence for corporates may be considered by the EU, along similar lines to the offence of failing to prevent bribery as set out in the Bribery Act," he said.
The anti money-laundering package must be adopted by all member states by the end of 2016, the Commission said.
The Commission also plans to look at a specific EU regime for freezing terrorist assets. In the meantime, it will improve the way the EU works with the United Nation's asset freezing measures.
A common definition of money laundering and sanctions is needed across the EU, and legislation must be developed to help authorities to act when they suspect illicit activity, the Commission said.
The Commission will also look into a system of tracking potential terrorist funding, it said, " for example to cover intra-EU payments which are not captured by the EU-US Terrorism Financing Tracking Programme (TFTP)".
Sources of revenue will also be disrupted, through assistance to Middle East and North African countries to fight trafficking of cultural goods, and increased powers for customs authorities.
"We have to ‘follow the money’ and cut off the resources these groups use to carry out their heinous crimes," said commission vice president Frans Timmermans.
"By detecting and disrupting the financing of terrorist networks, we can reduce their ability to travel, to buy weapons and explosives, to plot attacks and to spread hate and fear online," Timmermans said.
Ruck said that the Commission's plans will be seen as a positive step by many people in the financial services industry.
"The EU is recognising the potential conflict between seeking to ensure terrorist funding and other criminal activities are prevented and the legal rights of private individuals using the banking system. However, the proof as ever will be in the eating with regard to how the proposed measures are to be implemented," Ruck said.
"The EU may impose a common definition of money laundering offences and sanctions across the EU. It is unclear to me how this will assist cross-border judicial and police cooperation to tackle money laundering as one would have thought a widening or clarification of information sharing powers would be the way to achieve this," Ruck said.