LocalBitcoins Moving to New Identity Verification Process

By Emily Rys | February 12, 2019
LocalBitcoins Moving to New Identity Verification Process

LocalBitcoins has said last week in an official blog post (Feb 8) that it is in the midst of enhancing its user verification rules and processes in line with the European Commission’s 5th Anti-Money Laundering Directive (Directive 2018/843 of the European Union (EU), also known as 5AMLD) enacted in July 2018.

Without divulging further details, LocalBitcoins said the changes it will implement are “related to improving the registration of new accounts and the identity verification processes, introducing wallet withdrawal and trade volume-based verification tiers”.

The reason LocalBitcoins has decided to do these is because Finland has already drafted new legislation for virtual currency services, and amended its Anti-Money Laundering Act in accordance with 5AMLD, it explained.

The Finland-based company also claims to be “a pioneer in advising the regulatory agencies in this process”. The due date for EU member states to effect 5AMLD requirements in their national legislations is January 2020.

LocalBitcoins added that “by being a reference in compliance, we also aim to promote trust, legitimacy and maturity in the Bitcoin ecosystem, while paving the way for it to become a more viable and widespread currency and combating criminal use of Bitcoin and its network.”

LocalBitcoins claims its updated requirements are expected to bring “significant benefits” to users by promoting a safer trading environment and preventing fraud.

The changes could be timely for another reason. Just a few weeks ago, TheCryptoSight alerted that LocalBitcoins had fallen prey to a phishing attack. Vulnerability from a third party software it was using had led to an unauthorized source hacking its system. At the time, it was unclear how much Bitcoin might have been stolen, but the company did confirm at least six of its users had been affected.  

Founded in Helsinki in 2012, LocalBitcoins is a person-to-person Bitcoin trading site where users can post advertisements to state exchange rate and payment methods for buying or selling Bitcoins. Initially allowing anonymous digital currencies exchanges, the company updated its terms of service due to new EU regulations and included identification requirements in certain situations later on.

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