Ruling [ECJ] ¦ EU Court Clarifies Sanctions Risk for Business Leaders in Russia-Linked Revenue Sectors

A Grand Chamber ruling on the scope of the EU’s “leading businesspersons” criterion

In its judgment of 26 March 2026 in joined cases C‑696/23 P, C‑704/23 P, C‑711/23 P, C‑35/24 P and C‑111/24 P, the Court of Justice of the European Union considered five appeals brought by Dmitry Pumpyanskiy, Tigran Khudaverdyan, Viktor Rashnikov, Dmitry Mazepin and German Khan against EU asset-freeze listings.

The cases concern the EU sanctions regime adopted in response to Russia’s actions against Ukraine, particularly the listing criterion introduced following Russia’s full-scale invasion in February 2022. That criterion permits asset freezes against “leading businesspersons” and entities involved in economic sectors that provide a substantial source of revenue to the Russian Government.

The ruling carries major implications for sanctions compliance, financial institutions and Russian-linked corporate groups. Its reasoning indicates that a person may be listed not because they personally paid substantial taxes or directly financed the Russian Government, but because they are a leading figure in an economically important sector that generates substantial public revenue for Russia.

The disputed criterion targets sectors, not only individual taxpayers

The central issue was the meaning of Article 2(1)(g) of Council Decision 2014/145 and Article 3(1)(g) of Regulation No 269/2014. The provisions cover leading businesspersons, legal persons, entities and bodies “involved in economic sectors providing a substantial source of revenue to the Government of the Russian Federation”.

The appellants argued that the substantial revenue had to be provided personally by the designated businessperson. On that interpretation, the Council would need to establish that an individual’s own tax payments, financial contributions or other payments formed a substantial revenue source for the Russian Government.

The Court rejected that approach. It held that the wording of the criterion, considered across the EU’s language versions, supports the interpretation that the relevant revenue comes from the economic sectors in which the persons or companies operate. The Court found that most language versions clearly link the phrase “providing a substantial source of revenue” to “economic sectors”.

This matters because the Council does not have to prove that the individual businessman directly made large payments to the Russian State. It may instead establish that the person is a leading participant in a sector that materially contributes to Russia’s public revenues.

For financial crime and sanctions teams, this expands the practical focus of due diligence. It is not sufficient to assess whether a shareholder, director or executive has direct government contracts, state ownership links or documented personal payments to public authorities. The economic characteristics of the sector itself can be central.

Bastian Schwind-Wagner _Follow

"The Court of Justice has confirmed that EU sanctions may target leading businesspersons involved in Russian economic sectors that generate significant revenue for the Russian Government. The Council does not need to prove that the individual personally made substantial tax payments, directly financed the State, or exercised political influence over it.

For compliance teams, the ruling increases the importance of assessing a person’s seniority, ownership position and role in economically significant Russian sectors. Screening and risk assessments should account for sector-level exposure, not only direct government links or evidence of personal support for Russia’s policies."

“Substantial” means significant, not necessarily a fixed percentage of the state budget

The Court also addressed the word “substantial”. The appellants contended that the term required a numerical comparison between the revenue generated by the relevant sector and the Russian Government’s total budgetary revenue.

The Court did not accept that a fixed percentage or comparative threshold was necessary. It upheld the General Court’s approach that a substantial source of revenue means a significant, and therefore not negligible, source of revenue.

According to the Court, a sector can provide a substantial source of revenue to the Russian Government even if its contribution is not assessed as a specific percentage of total state revenue. The relevant assessment can be made in absolute terms.

The Court also confirmed that “revenue” covers the financial resources provided to the Russian Government by a sector, including taxes. The concept is not confined to a narrow class of direct payments from one named company or person.

This approach gives the Council considerable room to rely on macroeconomic evidence, industry data, tax data, export figures and information about the importance of particular sectors to the Russian economy. It also raises the evidential value of sectoral intelligence in sanctions investigations.

The purpose is to increase the economic cost of Russia’s war

The Court placed the disputed criterion in its historical and legal context. The EU had imposed restrictive measures in response to Russia’s actions in Crimea and eastern Ukraine since 2014. After the invasion of Ukraine in February 2022, the EU broadened the sanctions framework.

The Court explained that the purpose of individual and sectoral measures is to increase the cost to Russia of actions undermining Ukraine’s territorial integrity, sovereignty and independence. The “leading businesspersons” criterion was introduced as an additional means of creating economic pressure.

A narrower interpretation requiring proof that each listed individual personally supplied substantial revenue to the Russian Government would, the Court said, significantly reduce the criterion’s scope and effectiveness. It would also substantially overlap with another listing basis, which applies to persons or entities that financially support or benefit from the Russian Government.

Instead, the criterion enables the EU to target leading actors in important revenue-generating sectors. In the Court’s account, freezing their funds and economic resources may hinder the operation or profitability of those sectors and reduce the economic resources available to Russia.

The Court expressly connected this logic to the reality that an aggressor state’s economy can become, or be likely to become, a war economy. In that setting, restrictions targeting major participants in revenue-generating sectors may be used to affect the financing capacity behind military aggression.

“Leading businessperson” does not require proof of direct political influence

Another key question was whether a listed businessman must have personal political influence over the Russian Government, or a close relationship with President Vladimir Putin or other state officials.

The Court’s reasoning indicates that the answer is no. The term “leading” refers to a person’s importance, prominence or economic weight in their field of activity. The various language versions use expressions corresponding to leading, important, eminent, influential, main or dominant businesspersons.

The Court found that the text does not require the Council to establish that a businessperson actually has direct influence over the Russian Government or can personally pressure it to change policy. Nor does it require evidence of a specific political relationship.

A person’s occupational role, executive function, capital holdings, control of companies, or the scale of their commercial activities may be relevant to deciding whether they are a leading businessperson. The assessment is fundamentally linked to economic importance.

This is a significant point for designation risk. A compliance analysis based only on political exposure or direct state connections will be incomplete. Senior executives, controlling owners and major shareholders in strategically significant Russian sectors may face listing exposure even if there is no proof of direct involvement in state decision-making.

The cases illustrate the range of sectors at risk

The appeals concerned individuals connected with a variety of sectors and companies. These included steel and metallurgy, mineral fertilisers and chemicals, banking, technology, communications, industrial manufacturing, rail-related activity, energy-linked business and other large corporate operations.

The General Court had found, in the cases under appeal, that the relevant activities placed the individuals in economic sectors capable of providing substantial revenue to the Russian Government. The Court of Justice’s interpretation supports the principle that the assessment is sector-wide rather than limited to the individual tax contribution of one company.

The judgment is therefore relevant beyond the names appearing in the litigation. It has consequences for individuals and entities connected with sectors that are important to Russian public finances, including extractive industries, metals, transport, financial services, technology, telecommunications, chemicals, agriculture-related industries and major export-oriented businesses.

Implications for banks, insurers and regulated firms

For banks and other regulated businesses, the judgment reinforces the need for sanctions screening that goes beyond exact-name matching against EU consolidated lists.

Where a customer, beneficial owner, director or transaction counterparty has Russian exposure, firms should assess the person’s position in relevant businesses and the business sector’s importance to Russian public revenue. A sectoral risk assessment may be important even where there is no direct evidence that the individual personally funded the Russian state or participated in military or political decision-making.

This does not mean that persons operating in any Russian economic sector are automatically sanctioned. A listing still requires an individualised Council decision and a factual basis showing that the person is a leading businessperson or relevant entity involved in an economically important sector. However, the Court’s interpretation confirms that the legal threshold is not limited to direct state financiers.

Financial institutions should also consider the implications for ownership and control analysis. A formal resignation from an executive role, a transfer of shares, or a restructuring undertaken close to a listing date may not necessarily remove sanctions exposure, particularly where the Council’s evidence concerns the person’s role at the time the restrictive measures were adopted.

A broad but structured basis for EU listings

The judgment provides the Council with a broad legal basis for listings under the revenue-sector criterion, but it also sets identifiable elements that must be examined. The Council must show, first, that the person is a leading businessperson or that the entity is covered by the criterion. It must then establish involvement in an economic sector that provides a significant, non-negligible source of revenue to the Russian Government.

The Court’s approach does not depend on a fixed budgetary percentage, direct personal tax payments or proof that the listed person can directly influence the Russian Government. The essential link is between the person’s economic significance and the revenue-generating capacity of the sector in which they operate.

For sanctions practitioners, the message is clear: EU designation risk can arise from a business leader’s position within Russia’s revenue-producing economy itself.

Dive deeper

• EUR-Lex ¦ Judgment of the Court (Grand Chamber) of 26 March 2026, Joined Cases C-696/23 P, C-704/23 P, C-711/23 P, C-35/24 P and C-111/24 P, ECLI:EU:C:2026:245 ¦ Link
• Court of Justice of the European Union ¦ Recent judgment: Joined cases C-696/23 P Pumpyanskiy, C-704/23 P Khudaverdyan C-711/23 P Rashnikov C-35/24 P Mazepin and C-111/24 P Khan v Council ¦ Link
• EUR-Lex ¦ Council Decision 2014/145 ¦ Link
• EUR-Lex ¦ Council Regulation (EU) No 269/2014 ¦ Link