By Foo Yun Chee

STRASBOURG (Reuters) - The European Commission proposed on Tuesday stricter rules on the use of virtual currencies and prepaid cards in a bid to reduce anonymous payments and curb the financing of terrorism.

Virtual currency exchange platforms will have to increase checks on the identities of people exchanging virtual currencies, such as Bitcoin, for real currencies and report suspicious transactions.

Under the Commission's proposals the threshold for making anonymous payments with pre-paid cards was lowered to 150 euros ($167.28) from 250 euros.

"Member states will be able to get and share vital information about who really owns companies or trusts, who is dealing in online currencies, and who is using pre-paid cards," EU Commission First Vice-President Frans Timmermans said.

Following attacks in Paris last November by Islamic State militants the EU executive said it would step up measures to cut off terrorists' access to funds.

French authorities have proved that pre-paid cards were used by the Paris attackers.

Prepaid cards are issued by a wide range of operators including banks using major networks, such as Visa and MasterCard. They are different from debit and credit cards because they need to be loaded before payments can be made, but can carry substantial amounts of money.

MasterCard said it supported the Commission's objective of strengthening the security of prepaid cards while ensuring that people less well-off could still use them.

The proposed higher controls on virtual currencies and pre-paid cards "are important in tackling black market and terrorist financing", said Chas Roy-Chowdhury, head of tax at ACCA, which represents the interests of the accountancy sector.

The Commission proposed increasing the amount of checks banks have to carry out on financial flows from risky third countries, namely states with poor anti-money laundering rules and difficulties countering terrorism financing.

In a bid to end tax evasion after the publication in April of the Panama Papers - which revealed widespread tax avoidance practices by wealthy individuals - the Commission also proposed rules requiring the beneficial owners of trusts to be recorded in registers that in many cases will be accessible to the public.

Existing and new accounts will be subject to due diligence controls and the Commission will look into finding effective ways for each member state to share information on beneficial owners of companies and trusts.

"These proposals for public registers will be welcomed by citizens and anti-corruption activists who want to follow the trail of dirty money," Laure Brillaud, Transparency International EU policy officer, said.

"However, we are concerned that it will be all too easy to evade being on the registers in the first place by gaming the rules on trusts. By simply nominating a non-EU resident as a trustee the secrecy can carry on as before," she added.

Tuesday's proposals will need to be approved by the EU Parliament and EU states before they become law.

(Writing by Julia Fioretti and Ines Kagubare; editing by Susan Thomas)