EU Cracks Down on Crypto Sanctions Evasion

The European Union is strengthening its sanctions framework to prevent illicit actors from leveraging regulatory gaps in digital assets. To enforce this, Banca d'Italia, Italy's central banking institution, has tightened crypto screening procedures for payment services providers and crypto asset service providers.

According to the bank, these institutions must execute compliance checks on their customers when starting a relationship and every time a transaction occurs. This includes verifying the names of both the originator and beneficiary against the list of designated individuals and companies.

The bank emphasized that automated systems reviewing transactions should balance the need to limit false positives with identifying designated subjects. Additionally, it highlighted that minimum amount thresholds for subjecting transfers to checks are not foreseen, but rather intermediaries must ensure their systems do not include such thresholds to avoid limiting transfers.