Former IMF chief Dominique Strauss-Kahn is being questioned by French police investigating a suspected hotel prostitution ring.
Police in the northern city of Lille are probing a suspected prostitution ring in France and Belgium that has implicated police and other officials.
The 62-year-old former Socialist minister arrived voluntarily at a police station in the city just before 9am local time.
Mr Strauss-Kahn had been due to be interrogated as a witness but prosecutors said he was now a suspect.
Shortly after his arrival, prosecutors said he would instead be detained on suspicion of "complicity in pimping" and "misuse of company funds" and could thus face charges and see his detention stretch to 96 hours.
Officers have questioned prostitutes who said they had sex with Mr Strauss-Kahn during 2010 and 2011 at a luxury hotel in Paris, a restaurant in the French capital and also in Washington DC.
Mr Strauss-Kahn lived in the US capital while he was head of the International Monetary Fund before resigning from his IMF position in May.
Two men with ties to Mr Strauss-Kahn have been put under preliminary investigation in France on charges including organising a prostitution ring and misuse of corporate funds.
The former IMF chief's name surfaced in the investigation last year and his lawyer has asked that he be allowed to tell his side of the story .
Investigators are seeking to discover if prostitutes were paid using corporate funds from a large French construction company.
It is Mr Strauss-Kahn's latest run-in with police over alleged sexual misconduct.
He was charged by New York police in May with making a hotel maid perform oral sex.
The one-time French presidential hopeful has said the sexual encounter was "inappropriate" but not violent.
New York prosecutors dropped the case against him in August because of doubts about the credibility of his accuser, Nafissatou Diallo.
She says she was truthful about the encounter and is pursuing her claims in a lawsuit.
In a separate case last October, French prosecutors refused to pursue an allegation by a young French writer of attempted rape by Mr Strauss-Kahn.
The Paris prosecutor's office dropped the investigation into Tristane Banon's claim that Mr Strauss-Kahn tried to rape her during a 2003 interview for a book the then-23-year-old was writing, saying they could not send him to trial because it happened too long ago.
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