Italy Mandates Sanctions Screening for Crypto Transfers
Banca d’Italia requires crypto providers to screen transactions for EU sanctions compliance.
Italy’s central bank has mandated mandatory sanctions screening for all cryptocurrency transfers. This directive targets crypto asset service providers to enforce existing EU financial regulations.
The new rules require firms to implement internal controls that identify customers linked to sanctioned entities. The goal is to stop illicit flows across the European Union.
Regulatory Requirements for Service Providers
Banca d’Italia announced the requirement on Monday. Crypto asset service providers must now adopt specific policies to monitor transaction activity. They must ensure adequate controls to detect any involvement with restricted parties.
This measure aligns domestic operations with broader European sanctions frameworks. Providers face direct accountability for failing to screen their user bases.
Sanctions Evasion via Digital Assets
Cryptocurrencies are increasingly used by Iranian and Russian entities to bypass financial controls. According to GN markets/crypto (en-US), the Russian ruble-backed A7A5 stablecoin processed $110 billion in cumulative transactions between February 2025 and May 2026. This volume occurred despite Western sanctions targeting the instrument.
Iran’s central bank has eased foreign currency controls to promote crypto use. Businesses are encouraged to settle cross-border transactions using Tether’s USDt and Bitcoin. These settlements occur through Iranian exchanges to circumvent traditional banking restrictions.
US Actions Against Iranian Crypto
US authorities have taken direct action against Iranian crypto holdings. Treasury Secretary Scott Bessent stated on July 14 that more than $130 million in crypto was frozen. These assets were held in wallets linked to Iran’s central bank.
Blockchain analytics firm TRM Labs reported significant illicit flows in June. They identified over $3.8 billion in transactions between the exchange CoinEx and sanctioned Iranian entities. These flows accumulated over a period of more than seven years.
