France Calls on Binance to Improve Compliance Standards Amid EU Regulatory Shift
French financial regulators have called on Binance, the world’s largest cryptocurrency exchange by trading volume, to significantly bolster its internal compliance mechanisms. The request follows a series of in-depth, on-site inspections conducted by the French Prudential Supervision and Resolution Authority (ACPR), part of a broader European initiative to tighten oversight of digital asset service providers.
According to sources familiar with the matter, French regulatory officials have been carrying out compliance audits of Binance and several other crypto firms since late 2023. These inspections are part of France’s broader efforts to ensure that companies registered under the national digital asset licensing regime—known as PSAN (Prestataire de Services sur Actifs Numériques)—are meeting the stringent anti-money laundering (AML) and counter-terrorism financing (CTF) standards required for eventual approval under upcoming EU-wide crypto regulations.
The ACPR is closely scrutinizing whether platforms such as Binance and Coinhouse are adhering to the legal and operational requirements tied to their registration as digital asset service providers. Authorities have expressed concerns about Binance’s risk management procedures and internal controls, urging the platform to strengthen its compliance framework to align with evolving European standards.
In response to the inspection, a Binance spokesperson said the company views such regulatory checks as a routine part of operating in a regulated environment. While Binance acknowledged the inspections, both the ACPR and Coinhouse declined to comment on the regulatory review.
This increased regulatory pressure comes as European jurisdictions intensify efforts to centralize crypto oversight. France, Italy, and Austria recently urged the European Securities and Markets Authority (ESMA) to assume a more active supervisory role, particularly over major crypto entities operating across multiple EU member states. The EU is now working toward harmonizing licensing regimes and compliance frameworks through the Markets in Crypto-Assets (MiCA) regulation, which aims to create a unified regulatory environment across the bloc.
Binance’s compliance record has long been a subject of scrutiny. Over the years, multiple jurisdictions have raised red flags over its anti-money laundering protocols and Know Your Customer (KYC) verification systems. Critics argue that the exchange has allowed users to conduct transactions without adequate identity verification, posing potential risks related to illicit financial activity.
Last year, Australian regulators launched a probe into Binance Australia’s AML and CTF systems. Authorities flagged several concerns, including insufficient oversight by local senior management, high staff turnover, and flawed internal audits. As a result, Binance was ordered to appoint independent auditors within 28 days and implement more effective customer due diligence, transaction monitoring, and governance structures.
Binance has also faced significant legal troubles in the United States. In 2023, the Commodity Futures Trading Commission (CFTC) and the Department of Justice filed lawsuits against the exchange for allegedly operating an unregistered trading platform and violating AML laws. These actions culminated in a historic $4.3 billion settlement and led to the resignation and subsequent imprisonment of Binance’s founder, Changpeng “CZ” Zhao.
Despite these challenges, Binance has made strategic moves to re-enter markets where it previously faced regulatory hurdles. After withdrawing from several Asian markets in 2021 due to tightening compliance requirements, the exchange returned to South Korea by acquiring the licensed platform Gopax. In Singapore, Binance managed to continue operations despite not holding a local license, thanks to a remote workforce model that kept its core operations offshore.
The latest scrutiny from French authorities reflects a growing consensus among global regulators that crypto firms must meet the same compliance standards as traditional financial institutions. As the European Union prepares to implement the MiCA framework in 2024, regulatory bodies are ramping up their efforts to ensure that crypto platforms meet uniform standards across all member states.
This shift toward a more centralized and stringent regulatory environment signals a new era for the crypto industry in Europe. For Binance, the message is clear: in order to continue operating within the region, the company must demonstrate a firm commitment to transparency, accountability, and robust compliance.
In addition to tightening compliance, regulators are increasingly focused on the governance structures of crypto exchanges. Questions about Binance’s corporate structure, jurisdictional accountability, and the clarity of its internal ownership and management have made regulators wary. As financial watchdogs push for greater disclosure, Binance may be required to provide detailed documentation on its organizational hierarchy and decision-making processes.
One emerging area of concern is customer fund protection. As part of new regulatory standards, exchanges operating in Europe may soon be required to segregate client assets from company funds, much like traditional financial institutions. This would prevent the misuse of customer deposits and enhance investor protection.
Furthermore, as the EU inches closer to implementing MiCA, exchanges will need to invest in sophisticated monitoring tools capable of identifying suspicious activities in real time. This means deploying AI-driven compliance technologies that can adapt to evolving risk factors and regulatory expectations. Failure to do so could result in license revocation or exclusion from the European market altogether.
Another critical area under inspection is data privacy and cybersecurity. Regulators are now demanding that exchanges like Binance enforce robust data protection protocols to ensure compliance with the General Data Protection Regulation (GDPR). With the increasing threat of cyberattacks on financial platforms, exchanges will be expected to implement multi-layered security frameworks that protect against breaches and unauthorized access.
Additionally, Binance’s global expansion strategy may come under more scrutiny moving forward. Regulators are likely to assess how the company’s acquisitions and partnerships align with local legal requirements. Each regional entity must demonstrate a degree of operational independence and regulatory alignment to avoid potential accusations of regulatory arbitrage.
In the face of mounting regulatory demands, Binance has recently taken steps to restructure its leadership, bringing in compliance experts and former regulators to guide its global legal strategy. These hires are seen as a strategic move to rebuild trust with global regulators and signal the company’s willingness to embrace a more mature corporate governance model.
As the regulatory landscape continues to evolve, the pressure on Binance and other major crypto exchanges to comply with global standards will only intensify. For Binance, aligning with France’s and the EU’s compliance mandates is not just a legal necessity—it’s a strategic imperative for maintaining its leadership in the global crypto market.