Italy mandates sanctions screening for all crypto transfers

Italy’s central bank, Banca d’Italia, has ordered crypto-asset service providers (CASPs) to apply sanctions screening to every cryptocurrency transfer, regardless of value. The communication reiterates obligations already embedded in the European Banking Authority guidance and incorporated into Italian practice with a May 19 note that made those EBA requirements applicable from Dec. 30, 2025. Firms were explicitly told not to configure minimum transaction thresholds that would allow small transfers to bypass automated checks, addressing risks of structuring and other evasion tactics. CASPs must verify originator and beneficiary information before execution, use automated screening where appropriate, and escalate possible matches for further review while documenting decisions for supervisory inspection. The central bank clarified that instant‑payment exceptions available to certain payment service providers do not apply to crypto transfers processed by CASPs, so providers cannot substitute daily customer screening used for some instant-credit flows. The reminder arrives amid wider regulatory concern about crypto use in sanctions avoidance; reporting cited a ruble‑backed A7A5 stablecoin that processed $110 billion in cumulative transactions between Feb. 2025 and May 2026, and analysis noting over $3.8 billion of flows between a major exchange and sanctioned Iranian entities across more than seven years, as well as a U.S. action freezing more than $130 million in crypto linked to an Iranian central bank wallet. Market commentary mentioned that heightened compliance demands could affect pricing dynamics — specifically Bitcoin’s trajectory — by increasing operational costs and influencing cross-border flows. The directive does not create a new sanctions rule but places immediate operational pressure on CASPs to test and document their screening controls, sanctions-list coverage, alias matching, transliteration handling, blockchain-address analysis, update cadence for sanction lists, and escalation procedures, since MiCA authorization alone does not remove obligations under EU restrictive-measures rules.