Cryptocurrency exchange Binance announced it will require stricter background checks on customers to prevent money laundering.

Binance, the world’s largest crypto exchange, has faced scrutiny from countries like Britain, Germany and Japan, which are concerned about scams, money laundering, and the lack of protection it has for consumers.

Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde have voiced their concerns about money laundering involving cryptocurrency exchanges this year as well, while Securities and Exchange Commission Chair Gary Gensler and Sen. Elizabeth Warren, D-Mass., have also raised concerns about a lack of consumer protections in the crypto exchanges for investors.  

Binance users will have to complete a verification process to access its products and services by presenting an ID, driver’s license, or passport. This standard is shared by companies such as CoinBase Global Inc and Gemini, whereas Kraken requires personal information for limited access to trades. 

“We aim to work more collaboratively with policymakers to improve global standards and discourage bad actors,” Binance CEO Changpeng Zhao told Reuters

Binance hired a former U.S. Treasury criminal investigator as its global money laundering reporting officer but some lawyers question if the move would help the company appease regulators.

“It’s a nice marketing statement, but from a regulator’s perspective, it’s not enough. Since they are doing it on a voluntary basis, regulators do not know whether they have the authority to supervise the identity check, and no one can look whether they are doing it properly,” said Alireza Siadat, partner at the law firm Annerton in Frankfurt.

The move came following growing pressure for more regulation, particularly from Warren, who has compared the crypto market to the "wild west" and recently wrote a letter to Gensler asking him to crack down on crypto exchanges and impose regulations. 

 "I write to request information regarding the Security and Exchange Commission’s (SEC’s) authority to properly regulate cryptocurrency exchanges and to determine if Congress needs to act to ensure that the SEC has the proper authority to close existing gaps in regulation that leave investors and consumers vulnerable to dangers in this highly opaque and volatile market," Warren's letter began. 

Gensler responded weeks later saying “I believe we need additional authorities to prevent transactions, products, and platforms, from falling between regulatory cracks. We also need more resources to protect investors in this growing and volatile sector,” in a letter to Warren.

Warren had also written a letter addressed to Yellen asking her to develop a “coordinated and coherent” regulatory strategy.