French Authorities Investigate Binance for Aggravated Money Laundering
French Authorities Investigate Binance for Aggravated Money Laundering
French authorities have initiated an investigation into Binance, the largest cryptocurrency exchange, starting in February 2022. The probe focuses on allegations of “aggravated money laundering” and the unlawful provision of services to French users from 2020 to 2022.
The Investigation Against Binance
The investigation against Binance involves two main aspects, as revealed by the Paris public prosecutor’s office. Firstly, authorities are examining whether Binance actively solicited French users and operated without the necessary license in the country. Secondly, they are delving into potential acts of aggravated money laundering, particularly related to investment operations, concealment, and conversion of illicitly generated profits.
Aggravated Money Laundering and Compliance Issues
The term “aggravated money laundering” refers to cases involving systematic money laundering or significant amounts of laundered funds associated with multiple individuals engaged in money laundering activities. Local media reports suggest that authorities suspect Binance of failing to fulfill its know-your-customer (KYC) and anti-money laundering (AML) obligations.
It’s important to note that Binance only implemented mandatory KYC verification in August 2021, which raises questions about its compliance with regulations before that period.
Suspicions of Illegal Operations and Regulatory Requirements
Since 2019, cryptocurrency exchanges have been required to obtain a digital asset service provider (DASP) license and register with the Financial Markets Authority (FMA) to operate legally in France. Without these licenses and registrations, crypto firms are prohibited from advertising their services to French consumers.
Although Binance became a fully regulated crypto exchange in France in May of the previous year, it had already been providing services in the country since 2020, according to local sources. Authorities suspect that Binance engaged in illegal advertising and promotion of its services to attract French users prior to obtaining the necessary license.
Similar suspicions were raised in the recent charges brought against Binance by the U.S. Securities and Exchange Commission (SEC). The SEC’s lawsuit accused Binance of unlawfully soliciting U.S. customers, commingling user and corporate funds, and failing to comply with anti-money laundering regulations.
Binance’s Cooperation with Authorities
In response to the investigation, a Binance spokesperson assured that the exchange is actively cooperating with regulators to fulfill all compliance requirements. The spokesperson emphasized Binance’s commitment to abiding by French laws, just as it does in all the markets where it operates.
While the spokesperson refrained from commenting on the ongoing investigations, they confirmed that French authorities conducted an on-site visit to Binance’s premises last week. Such visits are part of the regulatory obligations faced by financial firms in the country, the spokesperson explained.
The prosecutor’s office stated that the documents and computers seized during the searches of Binance’s premises will undergo a thorough examination.
Furthermore, the Binance spokesperson asserted that user information is securely stored and only disclosed to government officials upon receipt of proper documentation and appropriate justification.
Binance’s Withdrawal from the Netherlands
Coinciding with the news of the investigation, Binance announced its decision to withdraw from the Netherlands after failing to obtain a license required for its operations in the country.
As the French authorities delve into the allegations against Binance, the exchange remains committed to working closely with regulators to ensure compliance with all relevant laws and regulations.
