Cryptocurrency provider tightens compliance in face of widespread fraud – JD Supra

CEP Magazine (October 2020)

LocalBitcoins, a Finnish peer-to-peer bitcoin marketplace plagued by criminal transactions, has spent the past year bolstering its compliance functions[1] after a study found that the marketplace processed the most criminal transactions of any cryptocurrency platform in the world.

CipherTrace, a blockchain forensics firm, released its spring 2020 report on criminal transactions across global cryptocurrency platforms,[2] which found that Finnish exchanges led the world for the third straight year, with just over 12% of all dark web cryptocurrency transactions flowing through its platform. The next highest percentage was found to be through Russian exchanges, which processed more than 5% of all criminal transactions.

The results led LocalBitcoins to invest in automatic screening and vetting software, as well as to implement protocols to align itself with Europes anti-money laundering directive[3] (AMLD5), which was published in May 2018. AMLD5 requires financial firms to implement strict know-your-customer protocols and extends to cryptocurrency platforms.

The CipherTrace study found that overall criminal transactions across all cryptocurrency platforms have decreased as more platforms implement stricter controls and compliance programs.

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Cryptocurrency provider tightens compliance in face of widespread fraud - JD Supra