Bank of Italy Mandates Sanctions Checks for All Payment Transfers

The Bank of Italy has issued new guidelines for payment service providers (PSPs) and crypto-asset service providers (CASP) in Italy. According to a public communication dated September 7, PSPs and CASPs must always verify the data of both parties involved in a transfer of funds or crypto-assets, except in certain exempt cases.

The regulator clarified that this requirement applies to all transfers outside of instant payments, for which EU law prohibits PSPs from screening both parties per transfer. However, PSPs are required to vet their own customers at least once a day instead.

The Bank of Italy also allowed PSPs assessed as low-risk to apply the same lighter treatment to domestic, Italy-to-Italy fund transfers.

The regulator urged firms to check that their screening systems meet the standard, including tools built or supplied by third parties. The release comes after a compliance-targeted dust attack on crypto exchange Kraken involving nearly 12,000 micro-transfers from sanctioned exchange HTX.