LocalBitcoins, a popular peer-to-peer bitcoin exchange platform, reportedly suspends dozens of user accounts without prior warning, citing AML verification processes, its customers complain.
LocalBitcoins, a Finland-based p2p exchange platform, freezes accounts of residents of a number of African, Middle East and Asian countries without prior warning, and some users report that they did not have the opportunity to withdraw their bitcoins.
LocalBitcoins has not yet commented on user complaints. The first messages about suspended accounts appeared about a week ago and affected users from countries such as Afghanistan, Iraq, Nigeria, Syria and Pakistan. They claim that they could not withdraw their bitcoins until they announced their desire to delete accounts.
After suspension, one of the LocalBitcoins users suggested in a thread on Reddit that LocalBitcoins actions may be related to the new European Union Anti-Money Laundering Act (AML), which is known as the 5th Anti-Money Laundering Directive (5AMLD).
In another post, a Reddit user described in detail that the following message was shown to those users whose accounts on LocalBitcoins were blocked:
“Customers residing or otherwise located in the following countries are required to have an enhanced due diligence process. The countries are defined by EU commission: Afghanistan, American Samoa, The Bahamas, Botswana, Democratic People’s Republic of Korea, Ethiopia, Ghana, Guam, Iraq, Libya, Nigeria, Pakistan, Panama, Puerto Rico, Samoa, Saudi Arabia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, US Virgin Islands, Yemen. The process to activate the account will be introduced in the near future. If you’re not willing to wait for your account to be activated, you can withdraw your bitcoins by deleting your account."
Also, users said that they will have to wait at least 14 days before they can delete their accounts and withdraw their bitcoins.
LocalBitcoins sales fell more than 50% from June 2019 to early January 2020. Founded in 2012, LocalBitcoins has become one of the most popular peer-to-peer bitcoin exchanges allowing secure P2P transactions directly between sellers and buyers without any third party. But in June 2019, LocalBitcoins suddenly banned cash transactions. As LocalBitcoins continued to tighten its AML policy in 2019 in accordance with European law requirements, its global trade volumes gradually decreased and fell to a multi-year low at the beginning of 2020.