LocalBitcoins, a Finnish peer-to-peer bitcoin marketplace plagued by criminal transactions, has spent the past year bolstering its compliance functions 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, 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 Europe’s anti-money laundering directive (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.