Directive from Banca d’Italia
On September 7, Banca d’Italia issued a directive to Italian cryptocurrency service providers emphasizing the necessity of conducting sanctions checks on each crypto transaction, irrespective of the amount involved. This instruction specifically cautions against the implementation of a minimum threshold for screening transactions, which could potentially enable small-value transfers to bypass essential checks that ensure compliance with sanctions regulations.
Reinforcement of Existing Obligations
This mandate does not introduce new sanctions policies; it instead reinforces pre-existing obligations aligned with the European Banking Authority (EBA) guidelines, which have been in effect in Italy since December 30, 2025. The reminder comes as the European Union has heightened scrutiny over the efficacy of financial institutions in enforcing sanctions, reflecting a broader trend of increased financial regulations in the crypto space.
Screening Requirements for Crypto Transactions
Banca d’Italia requested that crypto-asset service providers (CASPs) meticulously screen both the sender and recipient information prior to finalizing any transfer of cryptocurrency. This requirement holds true for every transaction, with no value-based exceptions. Reports indicate that the central bank has specifically called on these operators to ensure that their systems do not incorporate any minimum transaction limits that might restrict screening processes.
The rationale behind eliminating such minimum thresholds is to prevent scenarios where sanction-evading individuals could break down larger transactions into smaller amounts that remain below a screening limit, thus evading oversight. Under the new directives, even transactions valued at €1 must undergo proper sanctions checks. However, this does not imply that compliance teams need to manually verify every minor transaction; CASPs are permitted to use automated systems to compare customer data and transaction details against current sanctions lists, flagging any possible matches for further examination.
Compliance Framework and EBA Guidelines
As part of its wider regulatory framework, the EBA guidelines articulate the essential internal policies, procedures, and controls that all financial institutions—including banks, investment firms, and authorized crypto service providers—must maintain to identify sanctioned individuals or entities. Banca d’Italia formally adopted these guidelines via Note No. 52 on May 19, 2025, making compliance mandatory by the end of that year.
This recent communication from Banca d’Italia should be viewed more as a compliance reminder rather than the introduction of a new legal requirement. The central bank urges firms to reassess their existing systems to ensure they are effectively aligned with the established rules.
Distinction Between Compliance and Licensing
It’s important to note that compliance with sanctions regulations is distinct from the licensing and operational rules set out in the Markets in Crypto-Assets Regulation (MiCA). The MiCA initiative lays down governance and conduct standards, but obtaining authorization does not exempt firms from adhering to EU sanctions regulations. This distinction is crucial as national regulators move toward fully implementing MiCA. Recent reports indicate that over a thousand cryptocurrency firms in the European Economic Area still lack MiCA authorization following a significant compliance deadline.
Screening Protocols for Instant Transfers
Different protocols exist for screening specific instant credit transfers handled by payment service providers, due to the urgent nature of such transactions which complicates individual screening efforts. These providers are permitted to conduct daily screenings of their customer bases and update them as required by new sanctions. Nevertheless, Banca d’Italia stipulates that this flexibility does not apply to crypto transfers processed by CASPs.
Operational Burdens and Compliance Challenges
As the EU ramps up efforts to impose financial restrictions on entities suspected of facilitating sanctions evasion, Banca d’Italia’s reminder places immediate operational burdens on crypto service providers to diligently review their sanctioning procedures. Firms must ensure that the values of transactions do not influence the decision on whether to conduct screenings and that their processes are updated regularly with current sanctions data.
Additionally, challenges arise when dealing with blockchain addresses affiliated with sanctioned individuals or organizations. Solely relying on name-based checks may not suffice to capture all potential risks when transactions are routed through addresses linked to designated entities. Thus, firms may need a combination of customer checks alongside blockchain analyses.
Future Compliance Evaluations
No deadlines for compliance with the new directives were included in Banca d’Italia’s September communication, as the existing EBA rules are already operational. There were no disclosures regarding specific CASPs under investigation or impending penalties—any enforcement measures would depend on a regulatory assessment of the service provider’s control measures and conduct.
Moving forward, Italian cryptocurrency operators must conduct formal evaluations of their systems to ensure that they maintain robust sanctions compliance capabilities. A mere MiCA authorization will not guarantee that the controls in place are effective for every transaction.
