Italy’s Central Bank Mandates Sanctions Screening for Crypto Transfers

Italy’s central bank, Banca d’Italia, has ordered crypto service providers to implement mandatory sanctions screening for crypto transfers, aiming to curb illicit financial flows across the European Union. Under the new requirement, providers must establish internal policies and controls to enforce EU financial sanctions and identify customers or transactions linked to sanctioned entities.

Sanctioned Nations Increasingly Rely on Crypto

The move comes amid growing evidence that countries facing Western sanctions, including Russia and Iran, are turning to cryptocurrency to bypass financial restrictions. A ruble-backed stablecoin has reportedly processed over $110 billion in cumulative transactions despite being targeted by sanctions, while Iran’s central bank has separately eased currency controls to encourage the use of digital assets like Bitcoin and USDT for cross-border transactions.

US Authorities Have Already Taken Enforcement Action

Earlier this year, US Treasury officials confirmed freezing more than $130 million in crypto assets connected to Iran’s central bank, while blockchain analytics firms have traced billions of dollars in transactions between crypto exchanges and sanctioned Iranian entities over several years. Italy’s new screening requirement adds to a broader push by regulators across Europe and the US to close gaps that have allowed sanctioned parties to move funds through digital assets.