Many virtual currency services do not have the proper controls in place to prevent money laundering and stop bad actors from dodging U.S. laws, a top Justice Department official will tell lawmakers on Monday.
"Many are still struggling with implementing appropriate anti-money laundering, know-your-customer and customer due diligence programs,'' said Mythili Raman, the acting assistant attorney general for the Justice Department's Criminal Division, in prepared testimony before a U.S. Senate panel.
"As members of the U.S. financial community, virtual currency services can and must safeguard themselves from exploitation by criminals and terrorists by implementing legally required anti-money laundering and know-your-customer controls.''
Raman will appear alongside top officials from the Secret Service and Financial Crimes Enforcement Network before the Senate Homeland Security Committee on Monday, when they will answer questions about the growing use of digital currencies such as Bitcoin, and whether the government is doing enough to police the market.
(Read more: Beware of bitcoin-related Ponzi schemes, says SEC)