LocalBitcoins Adopts Blockchain Analytics for AML Safeguards
LocalBitcoins is the latest digital currency marketplace to utilize blockchain analytics tools. The platform has commenced using Elliptic’s Navigator risk analysis tool and Lens wallet screener to deter criminals from utilizing their marketplace. A CipherTrace report intimated that LocalBitcoins got the most criminal funds in the first half of 2020—It reportedly took in over 99% of criminal funds in the first five months of the year.
Until September 2019, LocalBitcoins did not have any Know Your Customer or anti-money laundering safeguards in place. It’s also a peer-to-peer marketplace that connects an interested digital currency buyer with a seller; it does not trade any digital currency itself. This made LocalBitcoins a prime location for criminals to offload their funds on unsuspecting buyers and enabled them to do so without confirming their identity. It also made it challenging for law enforcement officials to track illicit transactions on the platform.
Nevertheless, even though LocalBitcoins is still supposedly one of the most attractive digital currency marketplaces for criminals to liquidate their digital currency holdings, their implementation of KYC and AML procedures has decreased the total volume of criminal money flowing by the platform. LocalBitcoins stated it witnessed a 70% decrease in darknet transactions from September 2019 to May 2020 after fulfilling KYC and AML procedures.
Blockchain analytics software adoption
Blockchain analytic software is in high demand. In the past few weeks and months, we have witnessed the Ukraine Ministry of Finance, the U.S. Secret Service, and Internal Revenue Service (IRS) sign on to utilize a blockchain analytics platform. Various reports designate that cyber-crime involving digital currencies is on the rise. That being said, blockchain analytics software is necessary for any digital currency marketplace or government agency that deals with finance or crime. Blockchain analytics software alerts users when illegal transactions are taking place, and when stolen, money is on the move, which should deter criminals from utilizing any platform that utilizes blockchain analytics software.
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