The French branch of Binance, the world’s leading cryptocurrency exchange, is facing a preliminary investigation by the finance judicial investigation service under the direction of the specialized interregional jurisdiction of Paris, according to media reports by Le Monde.
The investigation, which began in February 2022, focuses on allegations of illegal canvassing of clients and aggravated money laundering. These allegations have raised concerns about the platform’s compliance with financial regulations in France.
The investigation specifically targets Binance’s failure to fulfill its obligations regarding “know your customer” (KYC) procedures. KYC procedures require financial services to conduct necessary checks to prevent their platforms from being used for money laundering. It is suspected that Binance may have neglected these obligations, potentially enabling illicit financial activities through its platform.
French authorities have intensified their efforts to combat money laundering and financial crimes in the cryptocurrency industry. The investigation into Binance’s alleged illegal client canvassing reflects the growing concerns surrounding the industry’s compliance with regulatory requirements. By scrutinizing Binance’s adherence to KYC procedures, authorities aim to ensure the platform’s compliance with anti-money laundering measures and protect investors.
In addition to allegations of illegal client canvassing, Binance is also facing suspicions of aggravated money laundering. The investigation focuses on acts of money laundering carried out by perpetrators of offenses that generated profits. This aspect of the investigation aligns with some of the allegations made by the U.S. Securities and Exchange Commission (SEC) in their recent proceedings against Binance.
The SEC charged Binance on June 5, 2023, with evading securities laws. Also, the allegations suggest that Binance offered its services to American customers illegally. The SEC noted that until August 2021, Binance did not require all customers to complete KYC documents. The lack of stringent KYC procedures raised concerns about the potential misuse of the platform for money laundering and other illicit activities.
The suspicions of aggravated money laundering further underscore the importance of robust regulatory measures within the cryptocurrency industry. Regulators worldwide are increasing their focus on ensuring compliance with anti-money laundering regulations to prevent illicit financial activities.