Italy's central bank, Banca d'Italia, has mandated that crypto asset service providers (CASPs) implement internal controls to screen for transfers linked to sanctioned entities. This measure is aimed at curbing illicit financial flows across the European Union.
The central bank requires CASPs to establish policies to enforce EU financial sanctions during the processing of cryptocurrency transfers. The goal is to ensure that customers and transactions associated with sanctioned parties are accurately identified.
The move comes as cryptocurrencies are increasingly used by Russian and Iranian entities to bypass financial restrictions. For example, the Russian ruble-backed stablecoin A7A5 processed cumulative transactions worth $110 billion between February 2025 and May 2026, despite Western sanctions.
According to reports, Iran's central bank has eased foreign currency controls to encourage the use of Bitcoin and Tether's USDt to settle cross-border transactions via Iranian exchanges. Additionally, the US Treasury has frozen more than $130 million in crypto assets linked to the Iranian central bank as of July 14.
TRM Labs reported that over seven years, more than $3.8 billion in flows occurred between the crypto exchange CoinEx and sanctioned Iranian entities.