Major cryptocurrency exchange Binance said today it would demand stricter background checks on customers to bolster efforts against money laundering, with immediate effect.

Binance has been under pressure in recent months from regulators across the world, who are concerned over the potential for crypto to be used to launder money and the risks to consumers from crypto trading.

The exchange, whose holding company is registered in the Cayman Islands, has scaled back its product offerings, including leveraged trading and tokens linked to equities.

It has also said it wants to improve relations with regulators.

The potential for cryptocurrency exchanges to launder money has long worried regulators, with US Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde among those this year to voice concerns.

The Dutch central bank on Monday said Binance was not in compliance with its anti-money laundering and anti-terrorist financing laws.

Binance said on its website that users would have to complete a verification process to access its products and services. Those who have not done so will only be able to withdraw funds, cancel orders and close positions.

Until now, document-based ID checks at Binance were only required for users who wanted higher limits on trading.

Users will now have to upload an ID card, driver's licence or passport to prove their identity, Binance said.

"This will further enhance user protection and combat financial crime," it said of the move.

Binance CEO Changpeng Zhao, a Canadian known by his nickname "CZ" tweeted a link to the Binance announcement, saying "actions speak louder than words".

Steps taken by crypto exchanges to make identity and background checks remain varied, with some demanding full documentation and others allowing users to sign up for accounts with as little as an email address.

Binance spot trading volumes in July were $455m, down almost a third from a month earlier but still the number one globally, according to data from CryptoCompare.

Binance's corporate structure is opaque though its holding company is registered in the Cayman Islands, according to British court documents and Malaysia's securities watchdog.