According to reports by French Daily Le Monde, the French branch of Binance, the world’s largest cryptocurrency exchange, is currently under a preliminary investigation by French authorities for alleged illegal canvassing of clients.
The investigation, initiated in February 2022 and led by the finance judicial investigation service under the direction of the specialized interregional jurisdiction of Paris, focuses on whether Binance failed to comply with regulatory obligations, particularly in relation to the “know your customer” (KYC) procedures. These procedures are designed to prevent money laundering and require financial services to conduct thorough checks on their clients.
The investigation aims to determine whether Binance violated its obligations regarding client onboarding and whether the exchange’s procedures adequately addressed the risks associated with money laundering. French authorities are closely examining Binance’s compliance with KYC regulations, as failure to properly implement these procedures could potentially enable illicit financial activities and money laundering through the platform.
Suspicions of aggravated money laundering
In addition to allegations of illegal client canvassing, French authorities are investigating Binance for suspicions of aggravated money laundering. The investigation involves examining possible breaches related to competition with investment operations, concealment, and conversion, all of which could have generated illicit profits. These suspicions align with some of the allegations the U.S. Securities and Exchange Commission (SEC) brought forth in their recent legal proceedings against Binance.
The SEC charged Binance on June 5 with evading securities laws, accusing the exchange of illegally offering its services to American customers. One of the specific concerns raised by the SEC was Binance’s lax approach to KYC procedures. The regulatory body noted that until August 2021, Binance did not require all its customers to complete KYC documentation. This raised significant concerns about the potential for the platform to facilitate illicit financial activities and money laundering.
The investigation into Binance’s compliance with French law governing crypto-asset platforms is another crucial aspect of the case. Since 2019, operating as a “digital asset service provider” in France has required obtaining approval from the Financial Markets Authority (AMF). This approval ensures that platforms adhere to strict regulations and safeguard customers’ interests. Binance, which began operating in France in 2020, is suspected of engaging in advertising activities before obtaining proper registration with the AMF in May 2022. This potential breach of French law is an additional focus of the ongoing investigation