Europe does have domestic payment infrastructure, that's in some ways more advanced than the US. That doesn't matter because US sanctions don't depend on control of the infrastructure itself. They have a recursive structure: if you don't enforce US sanctions, or you trade with a peer that doesn't, then you yourself become sanctioned. FATCA works the same way, as did the deployment of the global anti-money laundering system (a US invention, largely).
So someone could make a European bank for sanctioned individuals, and this would be allowed to exist but would never be able to transfer money to another bank except in cash?
