Peer-to-peer cryptocurrency trading platform LocalBitcoins is taking new steps to meet new anti-money laundering (AML) compliance guidelines. Based in Helsinki, the crypto fintech company is responding to the country’s Virtual Currency Service Providers Act.
Approved by Finnish regulators, the act amends AML guidelines to comply with the 5th Anti-Money Laundering Directive (5AMLD) issued by the European Commission.
LocalBitcoins lets users create listings that indicate the quantity of BTC they’d like to buy or sell. Once there’s a match, the two parties can then arrange to complete the transaction outside of LocalBitcoins using a long list of methods, including wire transfers and cash deposits directly to a bank account. 5AMLD guidelines have introduced several requirements for cryptocurrencies.
- Cryptocurrency-related businesses will have to carry out customer due diligence (CDD) and submit suspicious activity reports (SAR).
- Financial intelligence units may have to obtain the addresses and identities of cryptocurrency owners.
- Exchanges and wallet providers will have to register with local regulatory authorities.
Now that users on LocalBitcoins are required to provide basic information to verify their identities, illegitimate accounts on the platform are expected to decline. Whether the move goes against crypto’s censorship-resistant qualities is open to debate.
The exchange says it hopes the changes to its policy will improve the status of Bitcoin as a viable financial network and provide a safer and better service for its customers.
“The Virtual Currency Service Providers Act will come into full effect in the beginning of November 2019 creating a legal status for crypto assets, which should improve significantly Bitcoin’s standing as a viable and legit financial network.”
LocalBitcoins is also introduced a tiered structured for various types of customer accounts.
“The new id verification system will introduce four individual account levels per trade and BTC transaction volume, that should increase trustworthiness and add distinction to the user profile. Corporate accounts will undergo a separate verification process.”
The P2P platform has fueled Bitcoin adoption in many countries including Venezuela, where there have been record-breaking volumes as the country continues to struggle with hyperinflation.