Italy Cracks Down on Crypto Use for Sanctions Evasion

Italy's central bank, Banca d'Italia, has ordered mandatory sanctions screening for cryptocurrency transfers to prevent illicit flows across the EU. This move aims to curb the use of cryptocurrencies by entities sanctioned by Western powers, such as Iran and Russia.

Crypto asset service providers (CASPs) must implement policies and internal controls to enforce EU financial sanctions when processing crypto transfers. The bank emphasized the importance of identifying customers and transactions linked to sanctioned entities.

The increasing use of cryptocurrencies to evade sanctions has been a growing concern. The A7A5 stablecoin, backed by the Russian ruble, processed $110 billion in cumulative transactions between February 2025 and May 2026, despite being targeted by Western sanctions. Iran's central bank has also eased foreign currency controls to encourage businesses to use cryptocurrencies like Tether's USDt (USDT) and Bitcoin (BTC) for cross-border transactions.

US Treasury Secretary Scott Bessent recently stated that American authorities had directed a freeze of more than $130 million in crypto held in wallets linked to Iran's central bank. Blockchain analytics company TRM Labs reported over $3.8 billion in flows between crypto exchange CoinEx and sanctioned Iranian entities over seven years.