Italy’s central bank, Banca d’Italia, has mandated that cryptocurrency businesses operating within the country must carry out sanctions screening on all digital asset transfers. The goal is to strengthen efforts to combat illicit financial flows across the European Union.
Mandatory compliance for crypto service providers
Banca d’Italia instructed crypto asset service providers (CASPs) to implement thorough policies and internal controls designed to enforce EU financial sanctions whenever they process cryptocurrency transfers. The central bank emphasized the need for companies in the sector to maintain strict oversight to identify customers and transactions associated with sanctioned parties.
According to the bank, these enhanced measures are crucial as digital assets are increasingly exploited to breach financial restrictions. CASPs must closely monitor for links to sanctioned entities, ensuring that both individual clients and transaction flows do not violate EU rules.
CASPs should prioritize the implementation of real-time controls and robust verification systems to identify those involved in sanctioned activities, according to the Banca d’Italia’s announcement.
Crypto as a tool to bypass sanctions
The increased focus on compliance comes amid a rise in the use of cryptocurrency by entities in sanctioned countries. Iranian and Russian actors continue to turn to digital assets as a means to circumvent international financial controls.
Blockchain security platform CertiK reported that A7A5, a stablecoin backed by the Russian ruble, saw $110 billion in transaction volume from February 2025 to May 2026, despite Western sanctions targeting its use. This substantial movement highlights the ability of cryptocurrencies to facilitate cross-border transactions outside the traditional banking system.
Meanwhile, authorities in Iran have relaxed foreign currency regulations to enable businesses to settle international accounts using cryptocurrencies, such as Tether’s USDt (USDT) and Bitcoin (BTC), through local crypto exchanges. This strategy is reportedly designed to boost commerce while evading the constraints of external sanctions.
Mini dictionary: A7A5 stablecoin, a digital asset pegged to the Russian ruble, intended for cross-border payments and targeted by international sanctions for its alleged role in bypassing financial restrictions on Russian-linked transactions.
In June, blockchain analytics firm TRM Labs found that crypto exchange CoinEx processed more than $3.8 billion in transactions linked to sanctioned Iranian entities over a span exceeding seven years, further underscoring the ongoing risks facing regulatory authorities.
| Entity/Currency | Transaction Volume | Time Period | Jurisdiction |
|---|---|---|---|
| A7A5 stablecoin | $110 billion | Feb 2025 – May 2026 | Russia |
| CoinEx & Signaled Iranian entities | $3.8 billion | 7+ years | Iran |
US authorities target Iranian-linked crypto assets
On July 14, US Treasury Secretary Scott Bessent disclosed that American agencies coordinated the freezing of over $130 million in cryptocurrency stored in wallets controlled by Iran’s central bank. The move underscores global regulatory action seeking to curtail the circulation of digital assets connected to sanctioned regimes.
As digital assets become more prevalent in global financial transactions, regulators are tightening controls on platforms that may facilitate sanction evasion.
