Monday, May 2, 2022
Latest EU sanctions targeting Russian trusts
If you are a EU professional and are involved in a trust, private foundation or nominee agreement for a Russian settlor, beneficiary or ultimate beneficial owner (UBO) then you will need to extract yourself from these arrangements before 10 May, unless your clients hold EU passports or residence permits. Providing advice to a trust with a Russian UBO is not covered by the Regulation
As part of further sanctions issued by the EU against Russia, a new prohibition relating to providing certain services to Russian trusts or similar legal arrangements will be imposed.
Council Regulation (EU) 2022/576, Article 5m states:
- It shall be prohibited to register, provide a registered office, business or administrative address as well as management services to, a trust or any similar legal arrangement having as a trustor or a beneficiary:
(a) Russian nationals or natural persons residing in Russia;
(b) legal persons, entities or bodies established in Russia;
(c) legal persons, entities or bodies whose proprietary rights are directly or indirectly owned for more than 50 % by a natural or legal person, entity or body referred to in points (a) or (b);
(d) legal persons, entities or bodies controlled by a natural or legal person, entity or body referred to in points (a), (b) or (c);
(e) a natural or legal person, entity or body acting on behalf or at the direction of a natural or legal person, entity or body referred to in points (a), (b), (c) or (d).
- It shall be prohibited as of 10 May 2022 to act as, or arrange for another person to act as, a trustee, nominee shareholder, director, secretary or a similar position, for a trust or similar legal arrangement as referred to in paragraph 1.
- Paragraphs 1 and 2 shall not apply to the operations that are strictly necessary for the termination by 10 May 2022 of contracts which are not compliant with this Article concluded before 9 April 2022 or ancillary contracts necessary for the execution of such contracts.
- Paragraphs 1 and 2 shall not apply when the trustor or beneficiary is a national of a Member State or a natural person having a temporary or permanent residence permit in a Member State.
To read the full Council Regulation, please click here.
Author: Director of Tax and People Development at Baker Tilly International Androulla Soteri