The Bank of Italy has told crypto asset service providers (CASP) to strengthen sanctions screening systems for customers and transactions to prevent international sanctions evasion using cryptocurrencies.

Cointelegraph reported on Sept. 9 local time that the Bank of Italy (Banca d’Italia) recently issued supervisory guidance telling supervised financial institutions to put in place internal policies, procedures and control systems to properly implement EU and Italian financial sanctions. It stressed that systems should be appropriately designed and adjusted to identify customers and transactions linked to sanctioned persons during crypto transfers.

The step does not create new sanctions but specifically requires compliance with existing EU rules and European Banking Authority (EBA) guidelines. The EBA guidance calls on crypto businesses to establish control systems that can block fund transfers by sanctioned persons through know-your-customer checks, transaction screening and due diligence.

Authorities are focusing on cryptocurrencies amid concerns about sanctions evasion involving Russia and Iran, among others. Blockchain security firm CertiK said the ruble-pegged stablecoin A7A5 has exceeded $110 billion in cumulative on-chain transaction volume since its launch. The issuance, collateral and trading infrastructure related to A7A5 includes entities sanctioned by the United States, Britain and the EU.

Cross-border payments using cryptocurrencies are also reported to be expanding in Iran. The Financial Times reported that Iran’s central bank partially eased foreign-exchange rules so companies can use Tether and bitcoin, among others. U.S. authorities said they sanctioned cryptocurrency wallets identified as linked to Iran’s central bank last July, freezing more than $130 million.

TRM Labs also said in a June report it tracked more than $3.84 billion in fund flows over more than seven years between crypto exchange CoinEX and sanctioned Iran-related entities. Italian authorities view the identification of sanctioned parties and the ability to block transactions as a core control area for the financial sector as cross-border fund transfers via blockchain increase.