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.
They've frozen thousands of accounts. Twitter is in meltdown over it:
https://twitter.com/search?q=localbitcoins&src=typd