Italy's Central Bank Requires Sanctions Screening for Each Crypto Transfer
The Bank of Italy requires domestic crypto asset service providers to perform sanctions screening for every crypto transfer, regardless of the amount, and no minimum transaction threshold should be set to bypass automatic matching.
The central bank explicitly requires that the screening covers information on both the sender and receiver of each transaction, and verification must be completed before executing the transfer. This requirement targets the configuration of automated control systems, rather than requiring compliance personnel to manually review all small transactions; the system can still first compare customers and transaction information against the sanctions list, and only enter manual review if a suspected match occurs.
The related obligations are not new sanctions rules but are aimed at implementing the European Banking Authority's internal policies, procedures, and control guidelines for executing restrictive measures of the EU and its member states. The Bank of Italy has incorporated this into its national regulatory framework through Document No. 52 dated May 19, 2025, which will be applicable in Italy starting December 30, 2025.
Exemptions available to payment service providers for instant payments do not apply to crypto asset service providers handling crypto transfers. Crypto companies must check their screening systems, the frequency of sanctions list updates, and the alert handling process to ensure controls cover all applicable transactions.
The MiCA authorization cannot replace the independent obligations under the EU's restrictive measures rules. With the removal of the amount threshold, institutions find it harder to rely on simplified screening rules and must enhance the coverage of automatic matching, the timeliness of list updates, and the ability to handle false positives to prevent large sums from being split into multiple small transfers to evade controls.
From a market mechanism perspective, this is driven by regulation rather than transactions: compliance system providers, list data, and alert handling services will see increased demand, while small and medium-sized crypto service providers will face pressure from system upgrades and false positive handling costs. Large licensed institutions will benefit relatively due to their existing risk control infrastructure, making it more likely that funds will concentrate in licensed channels that have completed screening calibration.
Italy has ended the MiCA transition period, and the number of authorized crypto service providers domestically is limited. Regulatory communication focuses on whether systems are configured according to existing guidelines, rather than legislating to raise legal thresholds.
Source: Public Information
ABAB AI Insight
The Bank of Italy has gradually incorporated crypto asset service providers into the same restrictive measures framework as banking payment institutions in recent years: first implementing the obligation for funds and crypto transfer information to accompany transactions through Document No. 44, and then transforming the EBA's two sets of internal control guidelines on restrictive measures into national regulatory orientation through Documents No. 48 and 52, covering banks, electronic money institutions, payment institutions, asset management companies, and crypto asset service providers. This path aligns with previous legislative adjustments that included CASPs as subjects of anti-money laundering obligations and treated them as banking financial intermediaries, moving sanctions screening from "principle application" to "system configuration that can be checked."
Capital and resources are directed to three areas: procurement of sanctions lists and screening engines, transaction-level alert workflows, and full customer re-verification after list changes. The motivation is to block small splits from bypassing list matching while separating crypto transfers from the instant payment model of "end-of-day batch customer verification." The result is that compliance budgets shift from the licensing application stage to daily transaction processing, with small platforms either outsourcing screening capabilities or shrinking transfer operations to calibrated channels.
Similar structures appear in the EU's Travel Rule aligning the obligation for accompanying information on crypto transfers with traditional wire transfers: the UK and some EU countries first require complete information, then require that list matching cannot be exempted by amount. The industry's position has shifted from license expansion to control phase—after the end of Italy's transition period, only a few entities have been authorized, and regulatory focus has shifted from "who can do it" to "can each transaction be screened."
This represents a restructuring of the industry chain driven by regulatory changes: restrictive measures have shifted from a one-time verification of customer access to a pre-gate for each transfer. The mechanism is that once the frequency of list updates, false positive rates, and system thresholds can be checked, small transactions no longer constitute a regulatory blind spot, and pricing power shifts from transaction speed to compliance pass rates.
ABAB News · Cognitive Law
Once a threshold is set, the rules become a channel that can be dismantled.
Licenses only determine whether one can operate, while systems determine whether one can pass.
Once small exemptions are removed, costs will shift from the transaction end back to the infrastructure.