International peer-to-peer crypto exchange platform LocalBitcoins has revealed that it will now be put under the supervision of the Financial Authority of Finland. This is a blow for users who have continued to use the exchange for its reliable presence in the industry and the ability to make anonymous trades.
AML regulation and new features update – LBC blog posthttps://t.co/8SvGx1ecwl
— LocalBitcoins.com (@LocalBitcoins) March 25, 2019
LocalBitcoins, which is based in the Finnish capital of Helsinki, wrote in the post that the Finnish Parliament had granted approval for the new legislation that will legalize crypto assets. The regulator reportedly passed approval on a new Act on Virtual Currency Service Providers, which is expected to come into effect from November 2019.
The operator added:
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.
Finnish Regulators Mean Business
The Finnish Parliament also voted to make an amendment to the Act on Detecting and Preventing Money Laundering and Terrorist Financing, ensuring providers of crypto-based services are subject to the country’s Anti-Money Laundering (AML ) laws. The new law brings Finland’s regulation in line with the new European Union’s (EU) 5th Anti-Money Laundering Directive (5AMLD).
Under the 5AMLD, crypto exchanges are mandated to report suspicious activity and perform know-your-customer reports. Financial investigators can also obtain the identity of traders at will. Irrespective of your username online, investigators can get your full name and obtain your home address. Lastly, all crypto-related businesses must be registered with the relevant financial authority in their country.
LocalBitcoins, in particular, has been in the eye of the storm, where money laundering is considered. Last year, Bitcoin trader Theresa Lynn Tetley, popularly known as “Bitcoin Maven,” was sentenced to a year in prison and fined $20,000 for using her proceeds from narcotics to launder bitcoin. Another LocalBitcoins trader, Mr. Morgan Rockcoons from Las Vegas was accused of laundering money and running unregistered money transmitting business. There seems to be some shady activity going on the platform, which explains the reason why the authorities are bringing it under their direct supervision.
Safe and Secured P2P Platform
The implementation of the new AML measures seems to sit well with the exchange, as it believes the right regulation will improve the perception of the crypto market by the general public and increase adoption. Beyond cooperating with regulators, LocalBitcoins has been taking steps to ensure the safety of its users and stay compliant of the country’s regulatory framework.
As pointed out by the blog post, the exchange launched a new account registration process earlier this month, providing new users with the ability to verify their identity upon signing up to the platform. The platform plans to introduce different account levels for traders, with each level requiring a different verification process.
The LBC sign-up has been revamped! New users will be guided through email and SMS verification in a practical and quick way during onboarding, making it easier to trade with more partners right from the start. See your own acc verification status here https://t.co/s9Lzm3u4wk pic.twitter.com/lftF6qyEvD
— LocalBitcoins.com (@LocalBitcoins) March 20, 2019
Banking Woes for Crytpo Firms
The implementation of this framework by the regulators should help strengthen the relationship between Finish banking institutions and major players in the country’s crypto sector. Earlier this year, Prasos Oy, a crypto exchange platform and wallet service provider based in the country, was left out in the cold after a vast majority of banks in the country reportedly declined to do business with them.
According to the report, the exchange’s account with four major banking institutions in the country- S-Bank, the OP Group, Saastopankki, and Nordea Bank AB- were closed in 2017, as the banks in question were concerned about the unregulated nature of the crypto market and the prospect of enabling transactions in such a way that could violate the country’s ALM laws.
Speaking on the issue, Prasos CEO Henry Brade eventually clarified that the company had fully adopted the proper measures, and they were expecting authorities to act accordingly so as to avoid a situation that could freeze their business.