The bank immediately hit back in a statement, protesting that the fine, about $13 million, was disproportionate.
It also evoked "the contentious nature of the decision," and said it would lodge an appeal before the Council of State, which acts as the supreme court for administrative justice.
UBS France has been placed under formal investigation for trying to persuade rich clients to evade taxes through dodgy accounts in Switzerland.
The ACP, the Bank of France's regulatory arm, had been alerted to the parallel accounts that ran between 2002 and 2007.
They were not declared in France.
The investigating magistrates handling the UBS affair have sent a list containing 353 names of people suspected of having held a Swiss account and have requested details from the Swiss authorities.
The ACP said the bank had been "lax" in taking corrective measures, adding that the management "had waited 18 months to put controls to rectify this trans-border activity."
The French probe was launched after allegations from a former UBS employee turned whistleblower.
The issue jumped back to the top of the government's agenda in the wake of a scandal surrounding the former budget minister Jérôme Cahuzac, who in April was himself placed under investigation for tax fraud.
After months denying the allegations, Cahuzac had admitted to opening an undeclared Swiss bank account in 1992, and, after Switzerland pledged to cooperate with foreign tax authorities in 2009, transferring the some 600,000 euros ($770,000) to Singapore.
His role as budget minister included tackling tax evasion.
Switzerland's financial sector is a traditional refuge for foreign depositors and it has fought to defend its long-cherished principle of secrecy by giving ground in some areas but refusing to allow the automatic handover of account details.
The 27-nation European Union has asked Switzerland to open talks on updating a 2005 deal on taxing the savings of EU citizens held in its banks.
Switzerland taxes interest on the savings of such depositors at a rate of 35 percent — raised from the original 20 percent in 2011 — and pays the funds anonymously back to member states.
But Brussels wants to widen the net to cover dividends from shares and life insurance policies, as well as capital gains from the sale of shares and real estate.
A recent summit of G8 leaders agreed to fight tax evasion and corporate tax avoidance following an initiative last year by Washington and five European countries to begin moving in this direction by drafting a model agreement on sharing banking information based on a 2010 US law.