Italy’s central bank has instructed crypto service providers to strengthen sanctions checks on digital asset transfers, including transactions involving sanctioned individuals, organizations and related wallets.
Banca d’Italia said crypto asset service providers must maintain internal policies, procedures and control systems that allow them to identify customers and transactions linked to parties subject to European Union restrictive measures. The communication reinforces sanctions obligations already applicable under European rules and places fresh emphasis on how those controls are implemented in practice. The directive also makes clear that crypto transfers cannot be exempted from screening simply because the transaction amount is small.
Key Takeaways
- Banca d’Italia has told crypto service providers to apply sanctions controls to crypto transfers.
- Screening should cover both customers and transactions linked to sanctioned parties.
- No minimum transaction threshold should automatically exclude smaller crypto transfers from screening.
- The requirements reinforce existing EU sanctions obligations rather than creating a new sanctions regime.
- The move comes amid continued concern over the use of crypto by sanctioned Russian and Iranian entities.
Banca d’Italia Tightens Operational Sanctions Controls
The central bank’s communication focuses on how crypto asset service providers, or CASPs, should apply EU and national restrictive measures when processing digital asset transfers. Operators are expected to maintain systems capable of identifying whether customers or counterparties are linked to sanctioned individuals or organizations before transactions are completed. The guidance draws attention to European Banking Authority requirements governing sanctions controls for transfers of funds and crypto assets.
One of the most important operational points is that providers should not configure screening systems with a minimum monetary threshold that automatically excludes smaller transfers. That means a crypto transaction should remain within the scope of sanctions controls regardless of its value.
The requirement does not necessarily mean every transfer must be manually reviewed. Automated screening systems can be used, provided they are properly configured and capable of checking relevant parties against applicable sanctions lists.
Why Small Transfers Are Included
Removing transaction thresholds is intended to prevent sanctioned actors from avoiding controls by breaking larger transfers into smaller amounts. A screening system that ignores transactions below a fixed value could leave an obvious route for sanctions evasion.
Banca d’Italia therefore expects crypto companies to ensure their systems are properly calibrated and capable of identifying relevant sanctions risks across their transaction flows. The directive also underlines that having authorization under the EU’s Markets in Crypto-Assets framework does not replace separate obligations relating to sanctions compliance. For regulated firms, licensing and sanctions controls remain distinct requirements.
Russia and Iran Add Context to the Directive
The move comes amid continued scrutiny of crypto activity involving sanctioned jurisdictions. According to CertiK data cited in the supplied material, the Russian ruble-backed A7A5 stablecoin processed about $110 billion in cumulative transaction volume between February 2025 and May 2026 despite Western restrictions linked to the project.
Iran has also increasingly appeared in sanctions related crypto investigations. Reports cited in the material say the country has used digital assets, including Bitcoin and USDT, in cross-border settlement arrangements as access to traditional international banking channels remains restricted.
In July, U.S. Treasury Secretary Scott Bessent said authorities had directed the freezing of more than $130 million in crypto held in wallets linked to Iran’s central bank. TRM Labs also reported in June that more than $3.8 billion in flows had moved between crypto exchange CoinEx and sanctioned Iranian entities over a period of more than seven years.
Crypto Transfers Remain Traceable
Digital assets can help counterparties move value outside traditional banking channels, but public blockchains are not necessarily anonymous. Transactions on many major networks are permanently visible, allowing blockchain analytics companies and authorities to trace fund movements and connect wallets to known entities. That is why sanctions compliance increasingly involves more than checking customer names.
Crypto businesses may also need systems capable of analyzing wallet exposure, counterparties and transaction patterns that suggest links to sanctioned actors. Bad actors may attempt to complicate tracing by moving funds through multiple wallets, exchanges or blockchains, but those movements can still leave an identifiable onchain trail.
Italy Moves From Licensing to Enforcement
The directive also reflects a broader shift in Europe’s crypto regulatory environment. After years spent establishing regulatory frameworks and bringing firms under MiCA authorization, regulators are increasingly focusing on whether companies can demonstrate effective day to day compliance. For Italian CASPs, that means maintaining sanctions screening systems that work in practice rather than relying solely on regulatory authorization.
Conclusion
Banca d’Italia’s latest communication puts sanctions screening firmly into the operational responsibilities of crypto companies serving the Italian market. Providers are expected to screen relevant customers and crypto transfers without automatically excluding low-value transactions, while maintaining systems capable of identifying links to sanctioned parties.
The move does not establish a new sanctions framework, but it strengthens enforcement expectations at a time when regulators are paying closer attention to how digital assets are used by entities facing international financial restrictions.
